Chinese Companies May Gain Global Edge Thanks to Large Overseas Chinese Communities

Key Points:

  • Chinese companies have a unique advantage due to the large overseas Chinese population.
  • Experts highlight the opportunity for Chinese businesses to grow in global markets by targeting ethnic Chinese communities.
  • Despite slower global expansion compared to Japanese and South Korean brands, Chinese companies are poised to accelerate growth.

Chinese brands aiming to grow internationally have a major advantage over other Asian businesses: a large ethnic Chinese population living abroad.

According to Bain & Company’s latest study, this gives Chinese businesses a unique opportunity to expand by focusing on ethnic Chinese communities in foreign markets.

“The ethnic Chinese population overseas is so large in many markets that I think there’s a disproportionate opportunity for Chinese companies to target ethnic Chinese populations in other markets,” said David Zehner, senior partner at Bain.

Zehner emphasized that Chinese companies are now looking to replicate the success of Japanese and South Korean brands by focusing first on Asia, then expanding to Europe and North America.

Around 60 million ethnic Chinese live outside mainland China, with notable populations in countries like the U.S. and Singapore. In the U.S. alone, 5.2 million people of Chinese descent were recorded in 2023, while 74% of Singapore’s population is ethnically Chinese.

Chinese companies like Haier and Xiaomi have already started growing internationally, especially after the pandemic caused slow domestic growth. Xiaomi now earns more than 40% of its revenue from overseas, and Alibaba’s overseas e-commerce has grown rapidly.

Despite this, Bain’s study shows that Chinese businesses still lag behind their Japanese and South Korean counterparts in global market share.

But Zehner believes Chinese companies are just starting and will soon catch up. “I think there will be many opportunities for Chinese companies in many parts of the world to build categories where they’re not developed,” he said.

However, the road to success won’t be easy. Chinese brands like Chagee have faced challenges expanding abroad, especially when adapting to different cultures.

Zehner advises companies to be flexible and patient when entering new markets. “You need to approach international growth with a long-term mindset, not a get-rich-quick mindset,” he said.

Chinese companies are learning from these experiences and are determined to continue their global expansion efforts. Brands like Miniso are making significant progress, recently opening new stores in Indonesia and the U.S., with sales exceeding expectations.