Domestic firms poised to go global on positive tailwinds

Chinese companies are expediting steps to go global, fueled by the rapid expansion of the tech-intensive green products and the healthcare and information technology industries, a global professional networking services provider said.

This is expected to infuse greater economic vitality into host countries and play a pivotal role in the world's economic recovery.

The positive factors contributing to this trend are still being released, as the Chinese government unveiled a guideline in mid-July to encourage private firms to increase spending on research and development, speed up digital and technological transformation, and support their business expansion in overseas markets.

In terms of sectors and industries, the proportion of overseas investment by Chinese companies has increased steadily over the past five years, especially for some new emerging industries, said Matt Tindale, head of marketing solutions for the Asia-Pacific region at Linked-In, the California-based professional networking platform.

Thanks to China's industrial upgrade and green transition of the energy industry, the total export value of the country's three major tech-intensive green products — solar batteries, lithium-ion batteries and electric vehicles — soared 61.6 percent year-on-year in the first half of 2023.Together, they contributed 1.8 percentage points to the overall export growth during the same period, data from the General Administration of Customs showed.

"This is consistent with what we have seen in our customers' business performance on the LinkedIn platform," said Tindale, adding that companies have noticed a surge in Chinese businesses venturing overseas, particularly in sectors such as technology, internet, intelligent manufacturing, new energy and healthcare.

For instance, Chinese photovoltaic companies account for nearly half of the world's top 500 photovoltaic firms, and 35 percent of them are LinkedIn China's existing customers, like Trina Solar Co, Jinko Solar Holding Co and LONGi Green Energy Technology Co.

These companies are experiencing rapid growth and becoming influential players in the global marketplace, according to LinkedIn.

"It is also driven by advanced technology and high productivity. 'Made in China' is no longer merely relying on 'low labor cost' and 'low materials cost', but has become more competitive through advanced technology and high productivity," the Australian executive said, noting that the path and approach of Chinese companies going global are undergoing profound changes.

Tindale said some new emerging sectors, including technology, solar power and intelligent manufacturing, are breaking away from the traditional globalization path.

These companies are adopting a global mindset and have the capability to enter mature markets such as Japan, Singapore, Europe and the United States early on.

According to LinkedIn's latest report, named Breaking Borders, in collaboration with global consultancy Accenture, the top two manufacturing sectors — electronics and machinery — account for 45 percent of China's total exports to the US, Canada, France, Germany and the United Kingdom. This is indicative of China's gradual push toward higher-skilled and smart manufacturing.

There are more than 950 million members on LinkedIn's platform from more than 200 countries and regions across the world.

The group found that the Asia-Pacific region has emerged as the world's fastest-growing major area, partly driven by the rapid growth of digitalization. In the context of the Chinese market, digitalization has become a significant advantage for Chinese companies in their quest for growth.

Tindale said digital platforms are important for exporters looking to enter new markets and who have a limited understanding of the buyer landscape. Therefore, the company suggests that business-to-business platforms seeking to capitalize on the opportunities presented by digital platforms should prioritize key areas such as building international brand awareness online, targeted digital advertising, conversion and customer service.

"We will continue to assist Chinese B2B businesses to elevate brand awareness, foster engagement and drive lead generation in overseas markets," he said. "Harnessing global data insights, LinkedIn is able to cater to the diverse characteristics and needs of target audiences, facilitating the creation of tailored marketing content that effectively reaches potential customers with precision."

Despite facing an adverse external environment, China saw its outbound direct investment rise 22.7 percent year-on-year to 431.61 billion yuan ($59.5 billion) in the first half, according to the Ministry of Commerce.

The growth of China's ODI will be driven by domestic companies' improved ODI structure, with investment notably flowing into sectors including manufacturing, logistics and retail, said Bai Ming, deputy director of international market research at the Beijing-based Chinese Academy of International Trade and Economic Cooperation.