With the intensification of competition in the domestic market, enterprises need to find new growth points, and going overseas has become a key path for enterprises to expand their business territory. In addition, China's economy is transforming to a new pattern of dual-cycle development (i.e., a development pattern in which domestic circulation is the mainstay and domestic and international circulations promote each other). The wave of scientific and technological progress and industrial transformation has injected new impetus for Chinese enterprise going global. After the reform and opening up, China has experienced decades of rapid economic growth, and the added value of manufacturing products has also been increasing; It not only has significant international competitiveness, but also provides solid support for the manufacturing industry to go overseas.
With the increasing uncertainties in the global environment, enterprises will face various risks and challenges in the process of going global. To help companies better cope with the challenges of going global, KPMG China has launched the "White Paper on Chinese Manufacturing Enterprises Going Global: Riding the Waves, Accelerating the High-quality 'Globalisation' Development of China's Manufacturing Industry". The report mainly analyzes the road of China's manufacturing industry to go overseas from four aspects: new pattern, new trends, new challenges and new keys. This market research report will analyze KPMG's White Paper on Chinese Manufacturing Enterprises Going Global to help enterprises better cope with various challenges in the process of going global, turn challenges into opportunities, and enhance their global competitiveness.
A new pattern of China's manufacturing industry going overseas
According to the World Bank's 2022 data, the added value of China's manufacturing industry is nearly 5 trillion US dollars, accounting for 30.7% of the global manufacturing value-added value, and the scale of manufacturing has ranked first in the world for 13 consecutive years. In 2023, the total overseas operating income of China's top 500 manufacturing enterprises reached 7.2 trillion yuan, an increase of 1.16 trillion yuan from 2022, with a growth rate of 19.2%. The proportion of overseas operating income in total revenue increased to 18.4%. In the same year, the total overseas assets of these enterprises reached 6.89 trillion yuan, a year-on-year increase of 31.5%. In the first half of 2024, China's industry-wide outward direct investment reached US$85.3 billion, up 13.2% year-on-year. Among them, non-financial outward direct investment was 72.62 billion US dollars, a year-on-year increase of 16.6%.
KPMG's Industry Insights Report points out that overseas M&A and greenfield investment by Chinese manufacturing companies are showing a trend of trade-off, with greenfield investment showing strong growth, and industries such as electric vehicles and batteries, industrial and consumer goods manufacturing, which have led to Southeast Asia, Europe, Latin America and the Middle East as popular investment destinations.
Figure: China's manufacturing scale and global share, trillion US dollars (left axis), % (right axis)
Figure: The added value of manufacturing in the world's major economies in 2022 is worth one trillion US dollars
According to KPMG's analysis, the export product structure of China's manufacturing industry continues to be optimized, and the transformation from labor-intensive products to technology-intensive products is dominant. It is reported that the proportion of the export value of labor-intensive products in the total export value of the year continued to decline, and the export value of labor-intensive products accounted for 24.2% of the total export value in 2023. With the continuous transformation and upgrading of the domestic manufacturing industry, the proportion of China's exports of mechanical and electrical products and high-tech products has risen rapidly, of which the proportion of exports of mechanical and electrical products has jumped from 58.6% in 2019 to 74.4% in 2023, and the proportion of exports of high-tech products has fluctuated slightly around 30%. The proportion of labor-intensive products continues to decline, and the export value of labor-intensive products in 2023 will account for 24.2% of the export value of that year.
Figure: Proportion of export value of key commodities in total exports from 2019 to 2023, %
From January to July 2024, China's total exports reached 14.26 trillion yuan, a year-on-year increase of 6.71%. Changes in the structure of China's major export commodities show that the proportion of domestic exports continues to decline, including low-end labor-intensive products; The proportion of domestic exports continues to rise, including mid-to-high-end technology-intensive products. At present, China's export structure has been optimized and upgraded, and the export momentum of high-tech, high-value-added, green and low-carbon transformation products is good.
