The Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, currently under construction Photo: IC PHOTO

Chinese enterprises are entering a new phase of “going global,” shifting from product exports to capacity exports, with momentum accelerating. Amid profound global changes unseen in a century, Chinese enterprises face a range of challenges during this new phase, including high initial investment, numerous external uncertainties, and growing difficulties in transnational operations. Under these circumstances, strengthening systematic policy support has become essential to help Chinese enterprises achieve high-quality development in global markets.

New trends

Around 2011, China saw its first wave of enterprises “going global,” which peaked in 2016. The current wave began around 2021 and has continued to gather momentum. In 2024, non-financial outward direct investment reached $143.85 billion, while the number of enterprises expanding overseas climbed to 9,400—a record high. These developments suggest that overseas expansion has become a defining trend for enterprise development, as companies move beyond market entry to building long-term operations, embedding in local ecosystems, and strengthening global competitiveness.

Sectoral patterns are also evolving. Earlier overseas ventures were concentrated in labor-intensive industries such as textiles and garments, where firms relocated production to manage rising domestic labor costs. Today, technology- and knowledge-intensive industries are taking the lead, marking a structural upgrade in China’s global engagement. Equipment manufacturing, new energy vehicles (NEVs), and Artificial Intelligence (AI) hardware are becoming central to this new phase. In the first two months of 2026, China’s automobile exports increased by 57.9% year-on-year, with NEVs showing particularly strong growth. BYD exported 100,600 NEVs in February alone, with overseas sales exceeding domestic sales for the first time.

At the same time, Chinese enterprises are shifting from “Made in China” to “Brand from China.” From the growing international visibility of Chinese humanoid robots to the global success of Black Myth: Wukong inspired by Chinese mythology, Chinese brands are winning global recognition through distinctive technological and cultural strengths. In the service sector, emerging technologies represented by AI have given rise to a new form of “token globalization,” as Chinese AI models and services empower global developers through Application Programming Interfaces and open-source ecosystems, emerging as dynamic new engines of growth. These developments indicate that Chinese enterprises are extending toward both ends of the “smile curve”—from research and design to branding and marketing—while steadily enhancing added value.

Geographically, Belt and Road partner countries have emerged as major destinations. With the in-depth advancement of the Belt and Road Initiative, and as global industrial chains undergo substantial restructuring amid rising trade protectionism, these countries offer both market opportunities and strategic flexibility. In 2023, China’s non-financial direct investment in Belt and Road partner countries reached 120 billion yuan ($16.55 billion). In the first two months of 2026, exports to ASEAN grew by 20.3%, while total import and export with Belt and Road partner countries reached 4.02 trillion yuan ($554.5 billion), up 20.0% year on year.

The composition of enterprises going global is also changing. While state-owned enterprises once dominated overseas expansion, private manufacturing enterprises—particularly small and medium-sized enterprises—are increasingly taking the lead. From 2006 to 2020, the share of non-state-owned enterprises in China’s non-financial outward direct investment stock rose from 19% to 53.7%. In the first two months of 2026, private enterprises accounted for half of China’s foreign trade, with imports and exports reaching 4.51 trillion yuan ($622 billion), up 22.8%. A growing number of younger entrepreneurs are building companies with global ambitions from the outset, reflecting stronger international orientations.

Globalization models are becoming more diversified as well. While core links remain in China, enterprises are moving beyond single-product exports toward integrated industrial-chain expansion. Overseas manufacturing, supplier partnerships, and cross-border mergers and acquisitions are now the most common models: Shenzhen Skyworth Group has invested in factories in Indonesia, India, and South Africa; Infigen collaborates with distributors in Germany and Southeast Asia; and Mindray Medical expanded globally through its acquisition of DiaSys. Even as companies expand overseas, many retain core functions such as R&D and design in China, leveraging domestic supply-chain advantages.

Multiple driving factors

Avoiding uncertainties from global geopolitical conflicts and economic and trade frictions has become a key driver of overseas expansion. Rising geopolitical tensions and mounting China-US trade frictions have increased foreign trade risks, while global supply chains are becoming shorter, more localized, and more regionalized. In 2026, the United States initiated an investigation into the possible revoking of China’s Permanent Normal Trade Relations status, while the European Union announced plans for new long-term steel trade protection measures—both of which may affect Chinese enterprises’ participation in international trade. These developments underscore the importance of building “multi-point support” market layouts to diversify risks.

Cost advantages and policy incentives in emerging economies also play an important role. Labor costs typically account for 60%–65% of manufacturing expenses, yet wages in parts of Southeast Asia are roughly one-third of those in Shenzhen. Some countries, including Vietnam, offer generous tax incentives to encourage enterprises to establish production networks locally, such as full exemptions in the first four years and a 50% reduction for the next nine years.

The internal drive to pursue new markets and growth space is another factor driving outward expansion. Slower demand growth at home has prompted Chinese enterprises to seek a “second growth curve” overseas, while emerging economies maintain rigid demand for construction machinery and power grid construction. Chinese machinery often carries cost advantages of 20%–30% along with 50% faster delivery times, allowing enterprises to capture more than 70% market share in some emerging markets. Higher gross profit margins in overseas projects further strengthen Chinese enterprises’ incentives to expand globally.

Challenges remain

Overseas expansion requires substantial upfront investment and carries considerable risks. Decisions regarding destination markets and market entry strategies depend heavily on enterprises’ resource endowments and operational capabilities. Enterprises must comprehensively assess factors such as political stability, the presence and influence of local Chinese business networks, the clustering of industry alliances, and the distribution of Belt and Road projects. At the same time, globalization entails significant early-stage costs, including product certification, overseas staffing, sales channel development, and the establishment of international management systems.

Moreover, overseas markets differ markedly from domestic environments in terms of business practices, language, culture, and regulatory policies. Enterprises must therefore conduct thorough research and preparation before entering foreign markets.

Transnational operations are also becoming increasingly complex amid multiple external disruptions. Differences in legal systems, regulatory requirements, and market and cultural practices raise operating costs and complicate market expansion. Enterprises cannot simply replicate domestic business models but must selectively adapt supply chains and sales channels to local regulatory and compliance requirements. In some emerging markets, particularly in Southeast Asia, limited infrastructure, incomplete market regulatory systems, poor overall business environments, and relatively low administrative efficiency may offset advantages such as lower costs or reduced competition.

Multiple supportive measures

Strengthening policy support is therefore essential for advancing enterprises’ global expansion. Beyond principle-based encouragement, authorities can improve top-level policy design and establish comprehensive service platforms that provide legal, financial, and related services for enterprises going global. At the same time, more targeted measures—such as subsidies for first-time overseas ventures to fund legal, taxation, and other consulting services, loan interest subsidies for key overseas projects, premium subsidies for export credit insurance, improved cross-border dispute resolution mechanisms, and clearer operational guidance—along with establishing an online resource library of national judicial trial cases and sharing foreign related judicial guidance documents, while promoting the accurate application of international rules and practices and strengthening foreign-related law enforcement and judicial talent development.

The role of Hong Kong as a “super-connector” should be leveraged more fully. Against the backdrop of China-US trade frictions, Hong Kong’s function as a strategic buffer has become increasingly prominent. Expanding cooperation pilots between Hong Kong and Shenzhen could help leverage Hong Kong’s unique geographical advantages. This includes exploring the relaxation of small-sum domestic guarantees for overseas loans to increase the possibility of overseas financing for small and medium-sized manufacturing enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area, as well as making fuller use of the Qianhai Shenzhen–Hong Kong International Financial City to mobilize Hong Kong financial institutions to provide cross-border financial support. The overseas expansion task force could take the lead in introducing high-quality domestic brand clusters into Hong Kong’s core business districts and establishing a platform for sharing experience on going global.

Deepening sci-tech innovation and accelerating domestic industrial upgrading remain fundamental. Investment in scientific research should be increased, and enterprises should be encouraged to build global industrial and supply chains around the development of new quality productive forces. The practices of Huaqiangbei and BYD demonstrate that when products achieve sufficient technological advancement, market share tends to expand naturally. Meanwhile, making fuller use of the digital economy to accelerate the intelligent transformation and digital upgrading of traditional industries can further strengthen enterprises’ global positioning. Smoothing domestic circulation is likely to help tap into the potential of the domestic market, and strengthen enterprises’ long-term business confidence.

Li Xiaoying is a professor from the Institute of Guangdong, Hong Kong and Macao Development Studies at Sun Yat-sen University.