Report: Chinese Companies Leverage Digitalization for Global Expansion

A visitor takes a photo at the stand of TikTok, a social media app from Chinese tech company ByteDance, during a gaming trade show in Cologne, Germany, in August. [Photo/Agencies]

Despite external uncertainties, Chinese companies are actively expanding their overseas presence, with investments mainly focused on manufacturing and advanced technology, according to a report by global consultancy Accenture.

Globalization is a key way for Chinese companies to enhance their long-term competitiveness, said Yue Bin, chief operating officer for Accenture Greater China, adding that the main driver of business expansion in the world is gradually shifting from public companies to private companies.

The report showed that 92% of companies surveyed said globalization was a necessary step to sustain rapid growth and 55% said they expect to optimize resource allocation and build chain resilience. procurement through overseas expansion, while 49% aim to strengthen their innovation capacity. through interaction with other markets.

Chinese companies are confident in their internationalization push despite rising geopolitical tensions and continued COVID-19-related disruptions. The report noted that 95% of Chinese companies surveyed believed their overseas business would experience compound growth of more than 5% over the next three years, and 52% of companies expected growth of more than 20%.

The report used a four-level category to classify the level of internationalization displayed by Chinese companies based on the proportions of overseas revenue – an initial stage, a growth stage, an established stage and a fully globalized stage.

Considering the country’s vast domestic market, 32% of Chinese enterprises are still in the initial stage of globalization, with their overseas revenue accounting for less than 10% of the total. However, there was a significant number of established-stage companies (26%), whose overseas revenues accounted for 20-50% of the total.

“We found that energy companies are inclined to choose South Africa and Brazil, while internet companies prefer to expand their presence in Southeast Asia,” Yue said, noting that service and trade tend to prefer the European market.

However, certain obstacles and challenges hinder the development of Chinese enterprises in the varied and sometimes unstable political and economic landscape of overseas markets. Yue pointed to issues such as risk management, regulatory compliance, cultural differences, inefficient operations and slow decision-making.

He suggested that companies build tailor-made operating models suitable for globalization, establish a reliable, secure and regulatory-compliant digital infrastructure, and take advantage of cutting-edge technologies to strengthen global operations.

Experts said the continued improvement of digital infrastructure for logistics and payments has reduced costs and brought greater convenience to businesses looking to expand overseas.

Domestic companies have shown increased demand for digital technologies, localized services and ways to ensure security and compliance as they push for globalization, said Wang Chengfeng, research director at market analysis firm iResearch. , adding that global cloud infrastructure and related services will help digitize operations.

The first Chinese companies that chose to go overseas were mainly related to the Internet, including social media applications and video platforms, but traditional companies established a global footprint and strengthened their international competitiveness by adopting digital technologies, said Amazon Web Services, the cloud services platform of US tech giant Amazon. .

AWS added that Chinese companies are expanding their presence not only in traditional overseas markets like Southeast Asia, the United States and Europe, but also in emerging markets like South America, the Middle -East and Africa.

“The most useful thing for Chinese companies considering going overseas is to improve their management capabilities, as they need to adapt to global organizational structures and various corporate cultures in different places” said Jiang Han, senior researcher at consultancy Pangoal.

Building a diverse organizational structure suited to the development of Chinese enterprises will provide stronger impetus to brands seeking to expand overseas, Jiang said.