KPMG's analysis shows that Chinese manufacturing companies have achieved a broad cross-continent presence by establishing overseas branches, implementing greenfield investment strategies, actively seeking international cooperation and mergers and acquisitions, especially in key regions such as Southeast Asia, the Middle East and Latin America. These companies are shifting their focus from traditional manufacturing to smart manufacturing and green and low-carbon fields. In the increasingly competitive manufacturing sector, strengthening local operations and building resilient global supply chains have become key strategies for many companies.
In the process of globalization of China's manufacturing enterprises, large enterprises, especially those industry giants with assets of more than 10 billion yuan, are constantly promoting the growth of overseas business, and the proportion of their overseas business revenue is also increasing year by year. At the same time, medium-sized enterprises with assets of less than 5 billion yuan are also actively deploying and expanding overseas markets. According to 2023 data, the total overseas operating income of China's top 500 manufacturing enterprises reached 7.2 trillion yuan, an increase of 19.2% year-on-year and an increase of 1.16 trillion yuan compared to 2022. The proportion of overseas business revenue in total operating income increased to 18.4%, an increase of 1.09 percentage points over the previous year. In addition, the scale of overseas assets also continues to grow, with the total overseas assets of China's top 500 manufacturing enterprises reaching 6.89 trillion yuan in 2023, a year-on-year increase of 31.5%. These data show that the influence and competitiveness of Chinese manufacturing enterprises in the global market are steadily increasing. At the same time, the new trend of Chinese manufacturing enterprises going overseas is gradually emerging:
Trend 1: Deepen the regional layout strategy
With the evolution of the global economic pattern, Chinese manufacturing enterprises have gradually set their sights on emerging market countries and regions, such as Southeast Asia, Africa, Latin America, etc. These regions have a huge population base and rapidly growing consumer demand, providing a broad market space for manufactured products. For example, the manufacturing industry in Southeast Asia is growing rapidly, and the demand for various types of machinery, electronic components and industrial raw materials continues to rise. By setting up a local production base or sales network, Chinese enterprises can better meet the local market demand, reduce transportation costs, improve market responsiveness, and increase market share and brand influence. According to the 2023 survey data, cross-continent layout has become a strategic choice for many enterprises, and 45% of them have implemented cross-continental layout. For example, the African continent has accelerated the pace of infrastructure construction in recent years, and there is a strong demand for products such as building materials, energy equipment, and transportation vehicles. Chinese manufacturing enterprises actively participate in infrastructure construction projects in Africa, which not only drives the export of related products, but also invests in local factories, realizes localized production, promotes local employment and economic development, and also wins long-term and stable market opportunities for themselves.
In the field of industrial equipment manufacturing, the sales offices and after-sales service teams set up by Chinese enterprises in the Middle East can quickly respond to the needs of local customers in the oil, gas and other industries for equipment maintenance, upgrading and technical support, and ensure that the production and operation of customers are not affected, so as to establish a good brand image in the local market and win more orders and cooperation opportunities.
Figure: The new trend of Chinese manufacturing enterprises going global
Trend 2: Transformation and upgrading: the global layout from traditional manufacturing to intelligent manufacturing, green and low-carbon transformation
At present, the business layout of overseas enterprises is still dominated by traditional manufacturing and infrastructure construction, of which the main position is machinery and equipment, automobiles and parts, electronic and electrical industries, followed by metallurgy and chemical industry, energy and power, aerospace, rail transit and other fields, the proportion of these traditional manufacturing and infrastructure construction still dominates. However, in recent years, with the rapid development of domestic e-commerce, small manufacturing industries such as household appliances have also made significant progress in going overseas. According to the data of the General Administration of Customs, in the first seven months of 2024, the cumulative export value of household appliances, including electric fans, washing machines, vacuum cleaners, microwave ovens, and LCD TVs, reached 409.19 billion yuan, a year-on-year increase of 18.1%, far exceeding the overall growth rate of the country's exports by 11.4 percentage points, and it has been a positive year-on-year growth for 17 consecutive months from March 2023 to July 2024. From the perspective of subdivisions, the United States and Europe are the world's largest smart home markets, and they are also the key target areas for Chinese smart home companies to compete to go overseas. According to market research firm Mordor Intelligence, the global smart home market size is expected to reach USD 120.1 billion in 2024 and is expected to reach USD 370.95 billion by 2029, registering a CAGR of 25.30% during the forecast period. Southeast Asia, Africa, Latin America and other emerging market countries and regions have a huge population base and rapid growth in consumer demand, and the demand for various household appliances continues to rise, providing a broad market space for small manufacturing.
With the adjustment of the global manufacturing pattern, the household appliance manufacturing industry in some developed countries has gradually shifted to developing countries. China's small manufacturing enterprises can rely on their own industrial advantages and cost advantages to undertake some industrial transfer projects, cooperate with internationally renowned brands, and improve their technical level and brand influence.
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How Can China's Manufacturing Industry Better Cope with the Challenges of Going Global (4)
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