Chinese brands are increasingly seeking opportunities overseas as domestic economic conditions falter. With China’s extensive manufacturing capabilities serving as a solid foundation, many consumer-focused companies are expanding their footprint across the globe. This trend is driven by a combination of factors, including stagnant domestic spending and a persistent property crisis. As of November, Heytea, a notable player in the bubble tea market, has made headway in the U.S. with 15 stores. Meanwhile, Urban Revivo, a leading fashion retailer, plans to debut its first U.S. store in New York this year.
The global expansion of Chinese firms is not a recent development. Between 2017 and 2023, the number of Chinese companies investing overseas saw a significant increase. This growth reflects China's position as the world's third-largest international investor, trailing only the United States and Japan. Official data for 2024 underscores this trend, revealing that China's non-financial overseas direct investment (ODI) surged by 10.5 per cent from the previous year, reaching more than US$143.9 billion.
Urban Revivo stands out with its ambitious international plans, despite having no current presence in Europe or the United States. The company operates five primary manufacturing hubs across China, covering 790,000 square meters. With an annual capacity of 1.65 million tonnes of raw materials, including sugar and tea, Urban Revivo is well-equipped to scale its operations globally. Li Minguang, the founder of Urban Revivo, envisions the brand becoming the second Asian apparel retail brand to achieve global recognition and profitability, following in Uniqlo's footsteps.
“The only Asian apparel retail brand that has managed to build a name for itself on the global stage, achieve scale and be profitable is Uniqlo,” said Li Minguang.
“We hope to become the second brand from Asia to do that,” he added.
Despite the optimistic outlook, challenges remain. Tariffs imposed by the United States pose a significant hurdle for Chinese companies operating abroad. Aparna Bharadwaj, managing director and partner at BCG, highlighted the impact of these tariffs on business operations.
“Although Chinese companies have experience managing US tariff costs, tariffs of this magnitude will have a material impact on business operations,” she noted.
In response to potential increases in taxes in America, Li Minguang has considered adjusting Urban Revivo's pricing strategy.
“Our positioning is more ‘mass-market’ at home, but in the future, I’m thinking if the taxes were to increase [in America], we could just raise prices,” he stated.
Urban Revivo's founder also explored franchising opportunities abroad but encountered limitations.
“I saw a business opportunity right there and asked how much it would cost me to franchise,” Li Minguang recalled.
“They told me that wasn’t an option,” he added.
Another Chinese company making waves on the international stage is Pop Mart. The Beijing-based firm specializes in original figurines and plush dolls for adult collectors. A key strength for Pop Mart lies in its ability to develop and produce "quality IPs," which has fueled its overseas success. In 2024, nearly 30 per cent of Pop Mart's total sales came from international markets. Huatai analysts commended Pop Mart's diverse approach to IP development.
“Through ongoing IP development, the company has embraced a wide array of styles such as cute, Gothic, Japanese anime, hip-hop, and artsy,” said Huatai analysts.
“This approach not only allows it to cater to diverse preferences in the domestic toy market but also boosts its cultural adaptability across various international markets,” they observed.
Mixue Ice Cream & Tea is another brand leveraging China's robust supply chain for its international expansion. Based in central China, the bubble tea chain aims to capture global markets by localizing raw material procurement. Richard Lin, chief consumer analyst at SPDB International, emphasized the importance of this strategy.
“For bubble tea, you’ll have to localize the purchase of your raw materials,” Richard Lin advised.
Despite these strategic moves, Chinese brands face unique challenges when entering foreign markets. Chris Pereira, founder and CEO at iMpact, pointed out that Chinese retailers often focus more on product features and corporate achievements than on developing narratives that resonate emotionally and culturally with international audiences.
“Chinese retailers frequently focus on product features and corporate achievements rather than crafting narratives that appeal to deeper emotional and cultural dimensions,” said Chris Pereira.
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