Shenzhen firms accelerate global expansion

BYD cars fresh off the assemble line wait to be loaded onto the “BYD Explorer No. 1” roll-on/roll-off (RoRo) ship at the Xiaomo International Logistics Port in the Shenshan Special Cooperation Zone, bound for Europe. Xinhua

A visitor interacts with an AI-enhanced robotic dog that Transsion's TECNO sub-brand unveiled at this year's MWC in this Feb. 26 photo. Xinhua

A Thai farmer operates a DJI agricultural drone in Roi Et, Thailand, in this Aug. 1, 2022 file photo.Xinhua

A visitor uses DJI goggles at an exhibition in Toronto, Canada, in this Nov. 9, 2023 file photo.Xinhua

Naixue Tea's first global flagship store in Bangkok, Thailand, is packed on its opening day. File photo

SHENZHEN companies are making significant strides in their international outreach, with notable firms like Shenzhen Transsion Holdings Co. and BYD leading the charge.

Since introducing the “TECNO” mobile phone brand to the African market in 2006, Transsion has become a dominant force in the African mobile phone sector, with a market share exceeding 40% in the smartphone segment.

Similarly, the Shenzhen-based vehicle giant BYD has been accelerating its overseas investments by establishing overseas factories, extending its footprint from Southeast Asia to South America and Europe.

BYD managed to beat Tesla to become the world’s top-selling EV company in the fourth quarter of 2023. While the majority of those cars were sold in China, BYD’s export business is expanding significantly.

It exported over 240,000 cars in 2023, an increase of more than 300% from 55,000 cars in 2022. The 2022 sales volume was itself an increase of more than 300% from 13,000 in 2021.

A growing trend

Transsion and BYD are just two examples. The number of Shenzhen-based companies expanding globally surged in the first half of the year, ranking the city first among Chinese cities, according to a report by Shenzhen Special Zone Daily. Over 60% of Shenzhen-listed companies engaged in overseas business activities during this period, with 264 companies reporting overseas revenue totaling over 485 billion yuan (US$68.68 billion), a 13.8% increase from the previous year.

Key sectors such as electronics, automobiles, power equipment, communications, and transportation drove overseas revenue growth, which accounted for over 80% of the total income generated by Shenzhen-listed firms. Leading the charge in overseas revenue were companies like Luxshare Precision, BYD, Transsion, ZTE, and SF Holdings.

The list of China’s top 100 brands expanding internationally highlighted renowned Shenzhen-based companies including Huawei, BYD, DJI, Insta360, and Shokz. The list was unveiled at the 13th World Industrial Development Forum, which was held in Shenzhen on Sept. 27.

Shenzhen Chip Optech Co., Ltd. (Chipshow), a leader in the LED display sector, reported that approximately 70% of its revenue now comes from overseas markets, with major sales hubs in Europe, the U.S., Latin America, and the Middle East.

To bolster its international presence, Chipshow has been actively hiring local talent and implementing a strategy of sending employees from Shenzhen to work abroad. It also plans to establish more overseas showrooms and strengthen its sales and distribution network by building more sales centers and warehouses.

It may not be surprising to see Chinese manufacturers’ overseas expansion gaining momentum given the country’s position as the world’s largest manufacturing hub for many years. Now, companies from diverse sectors are going global. Traditional Chinese tea brands like Shenzhen-based Naixue have a strong presence in overseas markets.

“Southeast Asia’s culture and eating habits are relatively similar to ours, presenting significant market potential. Besides Thailand and Singapore, we plan to enter the Indonesian and Malaysian markets in the future,” said Zhang Yufeng, senior director of public communications at Naixue.

Government support

Recognizing the growing importance of local enterprises venturing abroad, government authorities in Shenzhen are actively involved in supporting these endeavors.

Since last year, Longhua District has organized government delegations to visit various countries for economic, trade, scientific, and cultural exchanges, conducting six visits to countries including South Korea, Japan, France, and Germany. This initiative has expanded the district’s “circle of friends” for international cooperation.

The Industry Outbound Alliance of Longhua District, launched Sept. 26, serves as a philanthropic platform to aid Longhua-based companies in expanding their reach in global industrial and supply chain sectors.

Mauro Rubin, CEO of biotech consulting firm Almatech Group, praised Longhua’s innovative approach to global business and expressed confidence that the platform would facilitate more efficient cooperation among interested parties.

Similarly, Longhua District launched a service base for enterprises aiming to go global, marking a significant step toward optimizing the business environment and promoting new quality productive forces in the district. This base will consolidate resources from multiple sectors to assist high-quality companies in their international endeavors.

Shenzhen’s commitment to facilitating global business operations is also evident through initiatives like the establishment of the Qianhai International Business e-Station in July. The e-station offers a range of services for overseas investments and market connections.

Also in July, the Shenzhen Municipal Development and Reform Commission hosted an event aimed at facilitating the global expansion of private enterprises. At this gathering, private firms discussed challenges related to qualifications while representatives from pertinent government departments and service institutions proffered solutions.

Increasing challenges

A report sponsored by the global human capital management firm ADP argues that the acceleration of global expansion efforts by Chinese enterprises is propelled by supportive policies, robust capital reserves, escalating market demands, and enhanced competitiveness.

Since 2023, there has been a noticeable surge in the number of Chinese companies venturing abroad. Nonetheless, the report underscores that it is imperative for companies to prioritize organizational strategy, management proficiency, risk management in human resources, and compliance with human resources-related regulations to boost their chances of succeeding overseas.

“Overseas gross profit margins tend to exceed domestic margins, translating to larger profit potential. Therefore, the proportion of Chinese companies expanding abroad is expected to continue increasing,” stated Xu Bin, director of the securities research department at UBS Securities.

Xu stresses that enterprises eyeing global expansion must not solely rely on their existing capabilities. Instead, establishing a supply chain in overseas markets to mirror domestic cost advantages will create enhanced prospects for international growth. (Shenzhen Daily)