July 30, 2025
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 (literally “to roll up”) is a Chinese term that refers to intense competition, also known as “involution”.
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 – known as “chu hai” (literally “going out to sea”) – is not new. The year 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.
In this foray, Singapore serves as an ideal location for regional headquarters, acting as a bridge between China and the rest of South-east Asia.
The nature of Chinese firms’ overseas expansion has also evolved in the past two decades – from merely exporting goods made at home, to establishing factories, regional headquarters and supply chains abroad.
China’s outbound investment flows are surging from already record levels.
According to government data, outbound direct investment in 2024 reached 1.16 trillion yuan (S$207.7 billion), an 11.3 per cent increase year on year.
China has ranked among the top three sources of outbound investment, behind the US and Japan, for 12 consecutive years.
Chinese firms seeking to expand overseas got a boost in 2000 when the government started its “go out” policy amid a stagnating domestic market and when China joined the World Trade Organisation.
In 2013, the government’s Belt and Road Initiative to alleviate industrial overcapacity and increase the country’s global influence spurred infrastructure projects overseas led by state-owned firms.
Also, in the 2010s, Chinese private firms began expanding overseas as domestic competition intensified.
SMEs dominate post-Covid-19 wave
Companies that offer consultancy and support services to Chinese firms with global aspirations tell ST that a new wave began during the pandemic, when lockdowns disrupted domestic production and government crackdowns on property and other parts of the private economy dampened business confidence at home.
Mr Donald Trump’s return to the White House has also given Chinese firms more urgency to diversify their operations, to avoid being caught off guard in an unpredictable global trade environment.
In this sense, their overseas expansion mirrors the “China plus one” strategy adopted from 2013 by multinationals seeking to reduce their China exposure.
“Pre-Covid-19, most of those who came out were the big boys,” said Mr Ho Kah Chuan, chief executive officer of Go Global Gem, a Singapore consultancy.
He was referring to state-backed behemoths like the China National Petroleum Corporation.
He noted that during and post-Covid-19, many high-net-worth Chinese who experienced strict lockdown measures left China to set up family offices in Singapore to diversify their businesses and mitigate risk.
“Now with the trade war, and with Trump slapping high tariffs, we are seeing all kinds of businesses, even small and medium-sized companies, that want to re-examine their supply chains,” he said.
Since 2020, the government has given financial support for overseas expansion to small and medium-sized firms recognised as “Little Giants” for being specialised, sophisticated, distinctive and innovative.
Hrunan, a Beijing-based provider of smart water solutions for flood management and irrigation, is one company that has benefited from this scheme.
Since embarking on its first overseas project in Uzbekistan in 2022, the company has seen its global operations contribute to one-third of its total turnover.
Now, it is exploring the possibility of setting up its regional headquarters in Singapore to better attract and serve clients in Vietnam, Cambodia, Indonesia and Malaysia.
ST spoke to about 20 Chinese companies at the Supply Chain Expo. Many say South-east Asia is a key destination for both markets and manufacturing bases, with Singapore standing out as the top choice for their regional headquarters.
One attraction is the region’s growth potential.
DBS Bank estimates that, from 2024 to 2034, the six largest Asean economies will grow at an average annual rate of 5.1 per cent, faster than their average in the previous decade.
Close commercial and political ties are another draw.
China is already a key trade and investment partner for nearly all South-east Asian countries. Many governments in the region are also politically friendly to China, presenting lower geopolitical risks than the US.
South-east Asia is also relatively peaceful and stable, compared with regions like the Middle East, making it a safer destination for long-term investment in factories.
In addition, the region has a young and growing population of both workers and consumers.
Another major factor is that Chinese products and services, honed through intense domestic competition, are at least a generation ahead in manufacturing and technology than those in South-east Asia. They are also cheaper than other global competitors.
Ms Ma Li, overseas business manager of Hrunan, said that, after 22 years of missteps and refinement in China, her company’s products and solutions are now sufficiently sophisticated, giving the company the confidence to finally expand abroad.
“For example, for a water valve that spans a canal as wide as the Singapore River in Boat Quay, we can build one that costs 30 to 40 per cent cheaper than what a European or American company would charge. We can also deliver it within a month, faster than our Japanese competitors,” she said.
Singapore as bridge for Chinese SMEs going overseas
Chinese companies say they like Singapore as their regional headquarters because they feel more at ease dealing with Mandarin speakers in the Republic.
They also appreciate Singapore’s strong connectivity with South-east Asia, pro-business environment, friendly tax regime and transparent legal system.
This has led to a proliferation of professional service firms in Singapore that support Chinese companies with global ambitions. The services they provide include consulting, legal advice, tax expertise, technology and recruitment.
Mr Ho, who has worked for close to 10 years in the Singapore public sector, set up Go Global Gem in 2021 to ride the wave of Chinese companies going overseas.
“Each of the 10 or 11 Asean countries has different tax structures and laws. Chinese companies need help to figure out how to avoid legal infringements and how to structure their business model such that they don’t have to pay more tax than they need to.”
He observed that as the trade war disrupts supply chains, companies that previously operated only in China will now need to do so across multiple countries and will value professional advice to navigate shifting policies.
For example, one of his clients, a home appliance company based in the Chinese city of Ningbo, already has a factory in Vietnam.
When Mr Trump imposed a 46 per cent tariff on Vietnam in April, the company began considering setting up an international headquarters in Singapore and another factory in Malaysia or Thailand.
Now that Mr Trump has announced in July that he has reached a deal with Vietnam – slashing the tariff rate to 20 per cent but imposing a 40 per cent trans-shipment tax – the company will have to re-evaluate its options.
Professional services providers are especially useful to smaller Chinese firms that previously held back from expanding overseas owing to limited scale, foreign exposure and in-house capabilities.
An example is Helport, a Singapore-based company founded by Chinese technopreneurs that provides artificial intelligence-enabled call centre services.
Its clients can subscribe to its service to avoid the hassle of hiring and training their own customer service and sales staff.
“When small Chinese companies go overseas, they often don’t know who to turn to and where to get what they want. We help to lower the bar that Chinese companies need to jump over to go overseas,” its CEO Li Guanghai said.
Reflecting on the intense competition in the Chinese economy, Mr Li said: “The cake used to be so big, it is now so small. Five hundred people are now fighting over what used to be fought over by only 50 people. It’s too tough to only stay in China.
“I think this wave of Chinese firms going overseas that started from the pandemic will go on for N more years. This is the big trend and there’s no turning back.”