How can Chinese enterprises go overseas from manufacturing to creation?

Author | Wang Xiaojun

Editor | Chai Xuchen

In the past two years, competition in many domestic markets has become increasingly fierce, and going overseas has become a necessary course for many companies exploring new growth. However, for companies just starting to focus on going abroad, the methods, precautions, and local regulations are all areas they need to actively learn about.

Since the 1980s, from China's accession to the World Trade Organization to the continuous emergence of Chinese companies going global, they have provided some experiences for those who follow in their footsteps.

On October 30th, at the "Navigator's Journey" - 2024 China Enterprises High-Quality Going Global Forum hosted by Sina Finance, many companies shared their experiences.

Among them, Lenovo, which has been established for 40 years, is one of the first Chinese companies to go global. At this forum, they released a new book titled "Going Global: Lenovo's 20-Year Practical Methodology of Globalization," which details Lenovo's experiences in going abroad.

Currently, for many Chinese companies, the important proposition of going global is not just about selling low-priced small goods to the world; rather, it is about selling new products of intelligent "smart manufacturing" overseas while leading the supply chain to go global as well, transitioning from merely going out to integrating into local markets.

This proposition is also a consideration for companies like BYD. Li Yunfei, General Manager of Brand and Public Relations at BYD Group, also attended the event to share his views on going global.

Li Yunfei introduced that BYD began its international business as early as 1996, initially targeting B-end customers such as Nokia and Motorola, thus building an international foundation. The second wave was the export of electric buses and commercial vehicles in 2011, where BYD buses can be seen in many cities across Europe. In London, their electric bus market share is as high as 80%.

Now, BYD is facing the wave of exporting new energy vehicles. This is a C-end business that directly faces consumers. Although they have previously accumulated international business experience, BYD is encountering new challenges.

Initially, when entering various national markets, BYD also faced some prejudices. Over the years, Li Yunfei discovered that going global mainly depends on two aspects: product strength and localization.

The first aspect is to have good technology and good products.

"Good technology and good products speak for themselves." Chinese consumers have a deep understanding of this; once they experience electric vehicles, they cannot return to fuel vehicles. This is also true for foreign consumers. In overseas markets, BYD's Yuan model has been recognized by many consumers and has achieved good sales.

The other aspect is that for companies entering unfamiliar overseas markets, it is essential not only to understand local regulations and product-related standards but also to grasp the real needs of the local market.

Li Yunfei cited examples, noting that in Nordic countries like Norway, due to mountainous terrain, products must be four-wheel drive in winter. In some countries, heated seats are considered unnecessary, increasing costs while users have a greater demand for air conditioning.

Therefore, when designing products for going global, it is crucial to have an international design, international standards, and an international product definition team. This should be done while meeting safety and technical standards, combining local needs to offer personalized requirements, allowing consumers to purchase the best products at appropriate prices It can be seen that for Chinese enterprises, moving from manufacturing to creation requires not only going out but also going in.

According to Qutian, the founder of ATM Capital, the biggest challenge in going in lies with people; the key is whether a localized overseas team can be established. Many failed cases often stem from issues related to personnel.

Qutian suggests that a team should initially be built by core members, and later, the proportion of Chinese individuals in the team should not be high, with locals taking the lead; it is essential to select and cultivate individuals from the local area who identify with the company's culture and values. Only through collaboration can synergy be achieved, allowing for better team management.

Qutian also gives an example: the CEO of J&T Express Indonesia is an Indonesian who joined the company from the very beginning of its establishment and rose to the position of CEO due to his outstanding performance. He has made significant contributions to J&T's localization efforts in Indonesia.

Of course, creation also requires exploring more markets where Chinese enterprises excel and have significant opportunities globally.

Huang Leping, the chief analyst for technology and electronics at Huatai Securities Research Institute, shared that if a product is intelligent, it often requires software capabilities as well. If several capabilities are combined in terms of intelligence, such as intelligence + machinery + electronics, the more capabilities that are layered together, the fewer countries will actually be able to produce them; for Chinese enterprises in the future, the combination of intelligence and hardware technology may be a successful formula.

For Chinese enterprises, going in is often as challenging as going out.

On this path, these players must maintain an entrepreneurial spirit while building localized teams, launching localized products, and gradually forming localized supply chains to gain recognition from local consumers, ultimately becoming leading global enterprises