Source: Discovery Report
It is said that Chinese enterprises are rolling, and it is really not ambiguous at all.
Whether it is physical goods, entertainment games, or even front-end technology, they are fighting for technology, service, quality, and innovation.
After the domestic roll reached the ceiling, I suddenly found that the world was so big that I could go and see it, and then I even began to roll up to sea.
2023 will be recognized as the first year for Chinese companies to go overseas, and large and small enterprises want to "go overseas". According to the data, in 2023, the number of foreign trade operators with import and export records in the mainland will exceed 600,000 for the first time.
By 2024, the pace of globalization of Chinese enterprises will be further accelerated, and high-quality going overseas has become the vane of this year's two sessions.
However, theoretically speaking, China's products have long been spread all over the world, so why do you have to go to sea? Will you definitely be able to make money if you go to sea? What problems do you still face? What other opportunities are worth paying attention to in 2024?
Let's take a look at 2024, is going to sea still a good way to make money?
Why go to sea?
Judging from the current situation in China, going overseas has changed from an "optional" to a "must" for many enterprises.
According to the "2023 Chinese Enterprises Going Global Confidence Report" released by BeyondClick, 87.6% of the surveyed companies show a positive attitude towards overseas business layout, and more than 60% of enterprises have overseas business expansion plans.
The overseas industry has also gradually expanded from cross-border e-commerce and new energy vehicles to some subdivisions and new tracks, such as games, short dramas, Chinese crafts, etc.
The forms of going overseas are also becoming more and more diverse, from the initial export products, to foreign investment and factory construction, to equity investment and mergers and acquisitions, and even direct overseas entrepreneurship.
The main body of going overseas is no longer just the previous "big enterprises", and more and more small and medium-sized enterprises have begun to enter the international stage. According to iiMedia Research, among the enterprises that have implemented the overseas layout, the proportion of medium, small and micro enterprises is 39.4%, 17.5% and 13.6% respectively.
So, why are more and more companies going overseas?
From a macro perspective, it is the general trend for Chinese enterprises to go overseas.
Looking back on 2023, the mainland economy has begun to gradually recover, with real GDP growth of 5.2%, slightly better than expected at the beginning of the year. However, the repair process is more tortuous and the overall pressure on the economy is greater.
If China's economic development is seen as a copy of the upgrade of the fight against monsters, then 2024 will undoubtedly be more difficult than 2023.
The main task is to establish an internal circulation, so that domestic demand can continue to be supported.
Although mainland investment and consumption will still show good resilience in 2023, the Central Economic Conference in December 2023 pointed out that the economic recovery will face challenges such as "insufficient effective demand and overcapacity in some industries", which means that domestic demand growth is likely to face great pressure in the future.
In the case of high pressure on domestic demand, it is necessary to find new demand and new markets, and naturally we need to go out.
International trade is becoming more and more important in the macro economy, and the mainland's exports will be 3.38 trillion US dollars in 2023, and the share of global exports will increase steadily.
For the enterprises themselves, they are also facing the challenge of insufficient demand.
With the intensification of competition in the domestic market, many industries have entered the "red sea", and the development of enterprises is facing bottlenecks, and it is difficult to obtain greater market space and more profits.
It is better to look at the bigger world outside and open up the international market, which can not only reduce the dependence on the single market, diversify the business risk, but also realize the diversified development of the business, obtain new growth poles, and obtain new opportunities for the sustainable development of the enterprise.
Reducing costs is also an important factor for many enterprises to consider going overseas.
On the one hand, the mainland's labor force began to decline around 2011, and the proportion of the population aged 15-59 decreased from 69.8% in 2011 to 61.3% in 2023, and the demographic dividend gradually disappeared.
Especially for the labor-intensive manufacturing industry, there is no advantage in terms of cost. This has forced many enterprises to take the initiative to seek to go overseas, set up factories abroad, build R&D centers, and make use of local rich raw materials and low labor costs to reduce costs and increase efficiency.
On the other hand, in recent years, overseas developed economies have implemented trade protection policies, which has raised the cost of products produced locally on the mainland. For example, the United States has promoted the reshoring of manufacturing and introduced the "principle of origin" and the policies of "nearshoring" and "friend-shoring", while the European Union has proposed an "economic security" strategy and launched a countervailing investigation into the mainland's electric vehicle industry.
A series of trade protection policies have raised the cost of locally produced products on the mainland, and investing overseas may become a new option to circumvent trade barriers.
At the same time, in order to attract foreign investment and promote economic development, many countries provide policy support such as tax exemption and tariff concessions to foreign-funded enterprises. This can reduce tax burdens and operating costs and increase profitability for domestic companies.
Can you get money by going to sea?
In this way, it seems that the wealth code is written in the overseas territory, so can you get money by going to sea? What challenges will you face?
No one can guarantee a steady profit in business, and the same is true for going to sea.
"Going to sea" is equivalent to competing with the best industries in the world, and the competitiveness of mainland industries going overseas comes from four aspects: supply chain advantages, internal market advantages, overseas policy advantages, and private enterprises-based advantages.
We all know that we are a big manufacturing country, backed by the complete supply chain that we already have, and mainland enterprises can achieve rapid response in the form of light assets, internal production efficiency, and rapid response to the outside world when they go to sea, and then reduce the dimensionality of international competitors from multiple dimensions such as technology, service, and price, and can also realize rapid replication of the model after going to sea, and even drive the improvement of the local business environment.
At the same time, the mainland has a super-large domestic market and the largest middle-income group, making it the most potential market in the world. According to data from the General Administration of Customs, in 2023, the mainland imported more than 5 trillion yuan of bulk commodities, nearly 3 trillion yuan of electronic components, and nearly 2 trillion yuan of consumer goods.
The huge market space not only provides a broad market space and cooperation opportunities for enterprises from all over the world, but also provides a mutually beneficial foundation for the mainland to open up new markets.
In addition, the state has also introduced a series of favorable policies, the policy dividends of stabilizing foreign trade continue to be released, continue to build pilot free trade zones and free trade ports, encourage cross-border e-commerce, optimize overseas services, etc., to remove obstacles for domestic enterprises to go global.
The rapid growth of private enterprises as the main body of foreign trade is also the key to the vitality of mainland enterprises going overseas.
As the main force of the mainland going overseas, private enterprises have been the largest foreign trade operator in the mainland for five consecutive years, enhancing the global market influence of "Made in China".
Of course, having such a strong competitiveness does not mean that going overseas is an easy task, and it also has to face the challenges of localized operation and compliance.
The business model of enterprises going overseas should be combined with the customs and customs of the target market, and finally form a localized business model of "local market, local operation, and local brand".
However, after all, there will be differences in language, culture, cognition, and behavioral habits, and it is inevitable that there will be ambiguous brand names, promotional slogans, and even embarrassing situations with local brands, which make local consumers have a unclear understanding of the brand's main business, products, and competitive differences.
In addition, there are various differences between overseas markets and domestic laws, regulations, policies, and supervision, which put forward requirements for the ability of local licenses, local teams, local servers, local funds, and local business partners in overseas enterprises and target markets.
Another is the problem of supply chain globalization, it is necessary to correctly evaluate the existing domestic supply chain to extend the coverage of the target market, if you cannot ensure the correct purchase, acceptance and delivery, it will lead to waste of time, inventory, delayed delivery, increased costs and other problems.
What other opportunities are available in 2024?
With the tide of globalization surging forward, the main force of going overseas has gradually expanded from low value-added industries in the past to more diversified and higher value-added industries such as culture and entertainment, new consumption, e-commerce, information technology, medical and health care, advanced manufacturing, and automobile transportation.
From the perspective of industry distribution, enterprises in the three major industries of information technology, advanced manufacturing, and medical and health care have the highest enthusiasm to go overseas.
From the perspective of the investment of overseas enterprises, the e-commerce retail industry is the most favored overseas track by capital, followed by enterprise services, advanced manufacturing, games, and entertainment media industries.
So in 2024, how to screen overseas investment opportunities?
Guojin Securities put forward three clues related to overseas investment opportunities.
First, industries with a high proportion of overseas business + continuous growth in overseas revenue + increased net profit margin. Mainly include: home appliances (white goods, home appliance parts), automobiles (auto parts, commercial vehicles), machinery and equipment (construction machinery), military (navigation equipment), light industry (household goods), clothing and home textiles, etc., mainly concentrated in some consumer manufacturing and high-end manufacturing.
Second, global competitiveness + high proportion of overseas business + industries that can smoothly achieve overseas expansion. Mainly include: electronics (components, consumer electronics), chemicals (chemicals, agrochemicals, chemical fibers, rubber, plastics, etc.), machinery and equipment (special equipment, general equipment), automobiles (passenger cars), etc.
Third, an industry with global competitiveness + room for the future. That is, the "new three" manufacturing industry represented by lithium batteries, new energy vehicles, photovoltaics, etc.
Guoyuan Securities speculates that the most competitive industries may be power, beverage, retail, electronic equipment components and automobiles and parts.
Kaiyuan Securities has three types of indicators: comprehensive capacity utilization, export share, and revenue data of listed companies, and believes that industries with greater potential to go overseas may include power equipment, machinery, automobiles, medicine, communications, electronics, light manufacturing, etc.
In addition, it is also necessary to believe that with the explosion of large models such as ChatGPT and Sora, the trend of the AI industry is accelerating, and the opportunities for related technologies to go overseas are also worth paying attention to.
In short, under the process of globalization, going to sea in 2024 and even for many years to come will become a must-answer question, and it is worth looking forward to how to show their talents.