Go global or go bust? Chinese firms in search of new lifelines overseas

Many see South-east Asia as the most feasible destination to begin their expansion

- Yew Lun Tian

BEIJING – Amid a sluggish economic recovery and a simmering trade war with the US that threatens to intensify, Chinese companies face a stark reality – go global or go bust.

While going global before the Covid-19 pandemic of 2020-2023 was about chasing profits, for a growing number of Chinese companies, it is now about survival.

At the China International Supply Chain Expo held in Beijing in mid-July, a common refrain among Chinese firms was "bu chu hai jiu chu ju", which translates as "if you don't go overseas, you're out of the game".

"Certain sectors of China's market have undoubtedly hit a growth ceiling or are very 'juan'," said Mr Chen Yideng, China managing director at Brand Finance, a London-based firm that ranks and evaluates global brands.

Juan is a Chinese term that refers to intense competition.

Mr Chen told The Straits Times that intensifying competition at home has driven up costs, squeezing profit margins for many firms.

"Going overseas is the most direct strategic choice for Chinese companies in search of new growth engines," he said.

China's economy enjoyed roaring growth from the 1990s, but began to slow after the 2008 global financial crisis, reaching just 5.2 per cent in 2024. The World Bank in June projected China's growth to slow to 4.5 per cent in 2025.

The international expansion of Chinese companies is not new. 1978 marked the first year Chinese firms, specifically state-owned enterprises, were permitted by the government to invest abroad.

What is new is the noticeably faster pace at which this has been happening since the Covid-19 pandemic, with smaller firms increasingly joining a trend once dominated by larger corporations.

For many of these smaller companies, South-east Asia's geographical proximity and emerging markets make it the most feasible destination to begin their expansion.