Opinion: As More Chinese Firms Go Abroad, Careful Planning Will Be the Key to Success

In recent years, the globalization of Chinese companies has become a central feature of China's economic landscape. According to data from China’s Ministry of Commerce, the country's nonfinancial foreign direct investment reached $143.9 billion in 2024, marking a 10.5% increase over the previous year. Investments in the ASEAN region grew by 12.6%, while $33.7 billion was directed towards Belt and Road Initiative participant countries, reflecting a 5.4% rise. Major sectors attracting capital included leasing, manufacturing, and wholesale and retail. These achievements are particularly notable given current volatile geopolitics and rising unilateralism, indicating that Chinese firms' overseas expansion is an important and hard-won accomplishment [para. 1].

The expansion is the result of decades of market reforms, and Chinese corporations now see globalization as a necessity rather than an option. However, this global push brings both successes and failures, as documented in the recent Caixin book series "The New Era of Going Global." Unlike previous efforts that focused on exporting products, Chinese enterprises are now also exporting entire supply chains, forging innovative paths into global markets. This evolution reflects a new level of ambition and complexity in China’s outward economic engagement [para. 2].

China’s unique advantages underpin this expansion. It has a comprehensive industrial base and complete supply chains, retaining a cost advantage over developed countries and superior talent compared to many emerging economies. With advancements in sectors like new energy, China has begun to display clear technological leadership. This follows the classic “flying geese paradigm” witnessed in the industrializations of the U.S., Japan, and South Korea, where industries migrate from advanced to less advanced economies. A similar transition is occurring in China, as Chinese firms increasingly shift from exporting finished goods to investing in overseas production facilities [para. 3].

Nonetheless, the context for Chinese companies is uniquely challenging due to intense international competition and rapid technological change, such as the rise of artificial intelligence and the global shift towards a low-carbon economy. To succeed, Chinese firms must move up the value chain—from simply manufacturing to emphasizing research and development, marketing, and services, which generate higher value [para. 4].

Risks on the global stage are pervasive. Lessons from earlier ventures—including those of companies like Huawei—underline the necessity of rigorous risk management. Success depends on detailed understanding and preparation for local regulatory, contractual, and cultural challenges. The failure to manage such risks can be catastrophic, especially given stricter labor and environmental standards and the unpredictability of global markets [para. 5].

Across successful cases, a prudent, well-researched approach is paramount. Early Chinese companies that achieved lasting global presence did so by investing in extensive planning and talent development. Conversely, many failed ventures were the result of impulsive, top-down decisions without adequate groundwork [para. 6].

Compliance is stressed as a 'lifeline' for international operations. Legal adherence and respect for local societal norms are vital. Building systems for compliance ensures long-term viability and reputation, making rule of law and fair competition the essential principles for Chinese enterprises abroad [para. 7].

Sustainable global businesses prioritize local engagement, drive community development, and enable knowledge transfer. When Chinese firms become responsible local stakeholders—spurring economic growth and adhering to social and corporate responsibilities—they build lasting reputations and lay the groundwork for future companies to succeed internationally [para. 8].

Such internationalization supports Beijing’s “dual circulation” strategy, integrating overseas business perspectives and practices with domestic operations. This approach not only generates profits but also drives industrial upgrading at home, helping China avoid the pitfalls seen in “hollowed out” manufacturing bases elsewhere [para. 9].

The global expansion of Chinese enterprises is reshaping the country’s economy and international market position. These changes are prompting companies to improve governance structures and encouraging regulatory evolution within China—developments critical for sustaining the momentum of quality global expansion [para. 10].