Chinese firms recognize advantages in region to boost internationalization

Lower costs, a more friendly business environment and cultural proximity are among the key factors that now drive Chinese enterprises to prioritize international expansion in Asia, industry observers said.

According to the International Labour Organization, per capita monthly income in 2021 in Vietnam and Indonesia was $291 and $176, respectively. Low labor costs have attracted global companies, especially manufacturers, to expand their industrial layouts in Southeast Asia.

Experts also said Southeast Asian countries have abundant labor resources and strong consumer demand.

"The number of overseas Chinese living in Southeast Asian countries accounts for 70 percent globally, as social environments and consumption habits there are similar. Moreover, the proportion of internet and digital talent aged below 35 there is fairly high," said Nancy Wang, the newly appointed China country manager at Linked-In, a California-based professional networking platform.

"All such elements allow Chinese enterprises to better join hands and form an advantage by combining upstream and downstream industries," Wang said.

LinkedIn data show that recently the Southeast Asian market has become the first stop for the internationalization of most Chinese business-to-business enterprises, especially those involved in cloud computing, industrial robotics, photovoltaics and intelligent manufacturing.

Sun Zuolei, senior vice-president of Shanghai Westwell Information and Technology Co, a company well-known for its full-stack intelligent port solutions and driverless container trucks, said the company participated in an industry conference in Hong Kong late last year and connected with many potential clients from Hong Kong, Southeast Asia and the Middle East, which helped build more opportunities for international business development.

"The company has established an international business headquarters in Hong Kong, where we'll actively integrate into Hong Kong's strategies to build an international shipping and logistics center, and science and technology innovation center to grow together with more users and ecological partners," he said.

GenScript, a Nanjing, Jiangsu province-based life sciences company founded in 2002, decided to locate its Asia-Pacific regional headquarters in Singapore in 2019.

Singapore's talent reservoir in medical biology was an element in their decision. Through collaborating with local recruiting agencies, building their recruitment channels and cooperating with local universities for joint talent cultivation, the company said that it has employed a fairly competent local workforce with extraordinary educational backgrounds and work experience.

According to the White Paper on Chinese Enterprises Going Global released by LinkedIn and Boston Consulting Group in November, the ratio of foreign investment made by Chinese enterprises in the world's total has continued to increase in recent years. The figure rose from 12.1 percent in 2016 to 20.8 percent in 2020.

"The global expansion of Chinese players remains an important component of global economic activity," said the report.

Overseas business capabilities of Chinese enterprises going international have steadily improved. Among the Fortune China 500 companies with overseas revenue, overseas revenue accounted for 19.1 percent of total revenue on average in 2020 compared to 12.8 percent in 2010, said financial services provider Capital IQ.

LinkedIn China on Thursday unveiled a learning solution to better help Chinese companies and enterprises go global and promote entering a new stage of growth on the international stage.

"By providing solutions in talent, marketing and learning, LinkedIn will continue to empower Chinese enterprises with global thinking and localized operational capabilities in foreign markets, assisting not only in going outside of China but penetrating the overseas markets," Wang said.