Chinese brands are increasingly setting their sights on international markets, with aspirations to expand and establish themselves as global powerhouses. Companies like Pop Mart, Urban Revivo, and Mixue Ice Cream & Tea are leading the charge, capitalizing on their strengths and unique business models. This trend comes as China cements its position as a major international investor, even as it faces potential challenges such as increased tariffs from the United States. The diverse strategies employed by these companies highlight both the opportunities and hurdles that come with venturing into foreign territories.
Pop Mart stands out for its unparalleled ability to incubate and produce quality intellectual properties (IPs). By signing exclusive deals with artists worldwide, Pop Mart has created blockbuster toys like "Molly" and "Labubu," capturing the hearts of collectors globally. Similarly, Urban Revivo, a fashion brand with ambitious goals, plans to expand in the U.S. this year, with founder Li Minguang aiming to build the world's most influential apparel powerhouse within two decades. Meanwhile, Mixue Ice Cream & Tea, with over 45,000 stores worldwide, has seen its overseas sales soar by 260 percent in the first half of 2024, reaching a staggering $189 million.
“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,” – Li Minguang, founder of Urban Revivo.
China has maintained its status as the world's third-largest international investor for over a decade. In 2024, China's non-financial overseas direct investment (ODI) jumped by 10.5 percent, reaching over $143.9 billion. This surge is partly driven by depressed domestic spending and a property crisis, prompting many Chinese firms to look abroad for growth opportunities. More than half of the 93 Chinese retailers surveyed by CBRE have plans to explore or expand their operations overseas.
“Although Chinese companies have experience managing US tariff costs, tariffs of this magnitude will have a material impact on business operations,” – Aparna Bharadwaj, managing director and partner at BCG.
However, these expansion efforts are not without challenges. Fashion-related items are among the Chinese exports expected to be most affected by a potential 60 percent tariff surge from the U.S., which could lead to incremental costs of up to $16 billion by 2033. Despite this, companies like Urban Revivo remain optimistic about their prospects.
Urban Revivo's strategy involves positioning itself as a mass-market brand domestically while considering price adjustments in response to potential tax increases in America. The brand is determined to follow in the footsteps of Uniqlo, the only Asian apparel retail brand that has achieved global recognition and profitability.
“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,” – Li Minguang, founder of Urban Revivo.
“We hope to become the second brand from Asia to do that,” – Li Minguang, founder of Urban Revivo.
In the realm of collectibles and toys, FMG, a Beijing-based company specializing in original figurines and plush dolls for adult collectors, has adopted a unique business model. Utilizing a proprietary system, FMG collaborates with over 100 contract manufacturers in southern China to produce nearly 10,000 product variants annually. This approach allows FMG to tap into China's mature and cost-efficient manufacturing base, while catering to diverse preferences across international markets.
“Through ongoing IP development, the company has embraced a wide array of styles such as cute, Gothic, Japanese anime, hip-hop, and artsy,” – 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,” – Huatai analysts.
China's manufacturing prowess remains a strong asset for these companies. According to James Yang, head of Bain & Company's Greater China retail practice, China continues to hold an advantage as a manufacturing base in terms of maturity, quality, and cost. While some Southeast Asian countries offer advantages for small-batch production due to lower labor costs, China excels in large-scale manufacturing.
“China has always had a clear advantage as a manufacturing base, whether it’s in terms of maturity, quality, or cost,” – James Yang, head of Bain & Company’s Greater China retail practice.
“While some Southeast Asian countries may be good for small-batch production, especially from a labour-cost perspective, China still has an absolute advantage when it comes to large-scale manufacturing,” – James Yang.
Despite these advantages, Chinese brands face challenges in crafting narratives that resonate with global audiences. Chris Pereira, founder and CEO at iMpact, notes that Chinese retailers often focus on product features and corporate achievements rather than engaging with deeper emotional and cultural dimensions that could enhance their appeal abroad.
“Chinese retailers frequently focus on product features and corporate achievements rather than crafting narratives that appeal to deeper emotional and cultural dimensions,” – Chris Pereira.
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