Report: Overseas expansion a growth necessity

Going global is no longer an option for Chinese enterprises but has become a necessity for their growth and development, according to a recent report. Industry experts believe that global expansion will be one of the most important investment themes for Chinese companies over the coming decade.

Amid adjustments in the global economic landscape, overseas expansion is no longer a strategic choice but a compulsory task for the survival and long-term development of Chinese companies, according to a report titled China's Global Reach: Green Real Estate Leads Manufacturing Overseas Surge, published on Jan 15 by London-based global real estate consultancy Knight Frank.

Overseas revenue of Chinese listed companies exceeded 10 trillion yuan ($1.44 trillion) for the first time in 2024, accounting for 13.8 percent of their total revenue, according to the report. In contrast, domestic revenue recorded its first decline in a decade.

Yang Yuechen, Knight Frank's head of research and consultancy in Shanghai and Beijing, said that from a macro perspective, industrial upgrading and policy guidance have driven a new wave of overseas expansion.

"High-tech industries, green energy, and the digital economy have emerged as major investment highlights, with Chinese enterprises steadily moving up the global value chain," Yang explained.

Data from the report indicate that China's outbound direct investment continued to grow. In the first three quarters of 2025, total outbound direct investment across all industries reached $128.93 billion, up 3.6 percent year-on-year. Among them, non-financial outbound direct investment totaled $110.74 billion, accounting for more than 85 percent of the total, highlighting the dominant role of the real economy. By the end of June 2025, China's total outbound direct investment had reached $3.35 trillion, it added.

Such insights are echoed by UBS Securities, which suggested that overseas expansion by Chinese enterprises will be one of the most important investment themes over the next five to 10 years.

Xu Bin, head of research at UBS Securities, took the proportion of offshore revenue among A-share listed companies as an example, noting that overseas revenue accounted for only 3 to 4 percent of total revenue two decades ago, rose to 15 percent in 2024, and continued to increase in the first half of 2025.

"This trend will continue over the next five to 10 years and beyond, with the proportion of overseas revenue for Chinese enterprises steadily rising," Xu said.

Rising overseas revenue not only reflects faster profit growth, but also indicates an improvement in earnings quality, added Xu.

Industry analysts generally classify overseas expansion into two main approaches: traditional exports, in which products manufactured domestically are shipped directly overseas, and overseas capacity building, where companies establish production facilities abroad.

Xu said that in the first 11 months of 2025, China's exports grew 5 percent year-on-year in US dollar terms. While exports to the United States fell 19 percent, this decline was offset by growth in exports to ASEAN, Africa, and other markets, reflecting the increasing diversification of China's export destinations."For exports, we expect year-on-year growth of 2.5 percent in 2026 and 5.5 percent in 2027," Xu said.

Zhang Xiao, executive director of foreign direct investment advisory with United Overseas Bank (China)Ltd, said that Chinese enterprises are adopting increasingly diverse overseas expansion models.

"Some Chinese companies place their research and development operations overseas to gain early access to talent and technology, while others seek overseas partners or rely on local agents and suppliers to support their international market expansion," Zhang said.

According to the Knight Frank report, Chinese companies' overseas real estate investment is more concentrated in logistics and warehousing facilities, industrial parks, and commercial complexes, closely aligned with their overseas operational needs.

Yang said that companies are advised to fully assess regional economic trends and policy incentives when expanding overseas, remain flexible in response to market supply and demand changes, and strengthen compliance management and localized operations.