Published: 17:14, May 16, 2024
Thinking big and going global
By Ma Si

New generation of Chinese firms use infrastructure, technology and talents to build reputations overseas

A view of the booth of Huawei at the 2024 Mobile World Congress Barcelona in Spain earlier this year. (PHOTO / XINHUA)

In 2014, a group of experts in smart manufacturing, each of them boasting around 15 years of work experience, gathered in a three-bedroom apartment in Beijing and decided to establish Beijing Roborock Technology Co Ltd. What was extraordinary was their clear and simple ambition: to develop the world’s best robotic vacuum cleaner.

Ten years on, their dream has come true. Roborock is a leading player in its sector and, in terms of global sales in 2023, the top-selling brand among smart vacuum cleaners worldwide, according to Euromonitor International, a market research firm.

Its products are available in more than 170 countries and regions, with nearly half of its revenue coming from overseas markets.

Quan Gang, president of Roborock, summed up the success story. “From day one, our eyes were set on the global market. From the very beginning, we have sought to meet the demands of global users. Our product design, production, and marketing efforts have been tailored to meet their demands from the outset.”

That helped the startup to remain flexible and nimble while preserving its unique technology. Corporate executives and experts said Roborock is the epitome of new-age Chinese enterprises that see the world as their oyster right from day one.

Such companies are quick to recognize that growing globally competitive brands in their respective segments is critical to success these days. They rely on both China’s manufacturing prowess and their own strengths in research and development.

What distinguishes them from the previous generation of globally known Chinese enterprises is their global vision and clarity on goals. While earlier firms went global only when they had grown big enough in the domestic market, the new cohort target the global market from the very beginning, experts said.

Huang Chenhong, president of German software and cloud giant SAP Greater China, who has witnessed the transformation of Chinese companies in their global expansion over the past three decades, said, “Despite challenges such as lackluster global demand and geopolitical uncertainties, Chinese companies have not slowed down their pace of going global.”

Overseas consumers look at Roborock's products at the IFA consumer tech fair in Berlin, Germany, on Jan 12, 2024. (PROVIDED TO CHINA DAILY)

Data from China’s Ministry of Commerce prove his point. Chinese enterprises’ outbound direct investment grew 5.7 percent year-on-year last year to exceed 1.04 trillion yuan ($143.7 billion), highlighting their continued expansion overseas.

“I think globalization is now entering a new stage. Globalization today involves more Chinese companies expanding their business overseas,” Huang said. “We can see many enterprises, whether State-owned, private, or even small and medium-sized enterprises, have 30 to 50 percent of their business overseas. Some companies are even born to serve overseas markets and have never considered doing business domestically.”

Chinese companies have attained a stage of technological innovation where they are starting to embody the spirit of multinational corporations.

“In the past, when we talked about MNCs, we thought of German or American companies. Today, Chinese companies come to mind naturally,” Huang said, adding that SAP has helped many Chinese companies such as Lenovo, BYD, and Mindray navigate international waters over the past three decades.

Wang Wei, general manager of AppsFlyer Greater China, an Israeli mobile marketing analytics company, agreed. “Chinese companies’ footprints are all over the world,” he noted. “There is no place where Chinese firms do not venture.”

The outcome of such spirited forays into global markets is that Chinese brands are becoming well-known and the preferred choices for many consumers worldwide. BrandZ China Top 50 Global Brands report, co-released by Kantar, a market research firm, and Google in 2023, underscored a trend by analyzing perceptions and evaluations of Chinese brands across 11 countries.

The report surveyed consumers’ opinions on Chinese brands. It disclosed that at least 70 percent of interviewees were willing to consider more than 90 percent of the total 234 Chinese brands involved in the research.

Notably, the most significant indicator for domestic brands — being considered “top-of-the-mind” among consumers — grew 7 percent year-on-year. Chinese brands now significantly influence buying choices abroad.

At the peak of Kantar’s list is Bytedance’s TikTok, followed by Xiaomi, Lenovo, Shein, Aliexpress, Huawei, Oppo, Haier, Hisense, and Vivo.

Chinese drone brand DJI ranked 16th and BYD, which makes electric cars, ranked 22nd.

A Xiaomi vehicle is on display at the 2024 Mobile World Congress Barcelona in Spain earlier this year. (PHOTO / XINHUA)

Technology and innovation have served as growth engines, powering Chinese brands going global, said Doreen Wang, CEO of Kantar Greater China and global chair of Kantar BrandZ, adding that Chinese brands have made technology and innovation central to brand-building, improved brand competitiveness and enhanced consumer experience.

Focusing solely on price will weaken a brand’s competitiveness and waste the opportunity to attract new consumers. Chinese brands expanding overseas should transition from a “cheap substitute” to a brand that enhances consumers’ quality of life, Wang said.

Many Chinese companies are already doing that. They have been expanding their presence in the high-end market, which used to be seen as the top challenge for their overseas expansion but is now well within their grasp. This is particularly true of Chinese labels operating in certain niches, thanks to growing R&D prowess, executives and experts said.

For instance, in the robotic vacuum cleaner segment, Roborock has notched up a solid sales performance in the United States, Europe, and the Asia-Pacific region. According to market research firm International Data Corp, Roborock leads the market in sales volume in Northern Europe and holds the top market share in Germany where consumers prefer high-quality products. Meanwhile, the company’s products have outcompeted those of US-based iRobot, which invented robotic vacuum cleaners in the early 2000s.

“Technological innovation is the cornerstone of Roborock. From the very beginning, we have hired outstanding talent from around the world and we have made breakthroughs in sectors such as radar laser technology and indoor navigation technology,” said Quan, the Roborock president.

Roborock has invested over 1.9 billion yuan in R&D and established three major research facilities dedicated to artificial intelligence (AI), electromechanical engineering, and optoelectronics, he said.

Even in product categories that boast bigger market size, like smartphones and electric vehicles, Chinese companies are doubling down on R&D.

Lei Jun, chairman and CEO of Xiaomi, said “cracking the high-end market is the only way for Xiaomi to grow”, and has described it as “a battle of life and death”.

The Beijing-based company is working hard to sharpen its technological strength in areas like mobile imaging and AI. The firm’s AI research since July 2016 encouraged it to set up a team in April 2023 to research and develop a large language model, a key technology behind generative AI applications such as ChatGPT. Xiaomi now has over 3,000 employees working on AI-related research.

BYD (an abbreviation for Build Your Dreams), which dethroned Tesla as the world’s best-selling EV-maker in the fourth quarter of 2023, is also working to expand its global presence.

In March, BYD surpassed Tesla’s China branch in terms of NEVs exported from the country. BYD exported more than 38,000 vehicles, followed by Tesla China’s 27,000, according to data from the China Passenger Car Association. BYD models have entered 78 countries and regions, including Japan, Germany, and Australia.

The Chinese automaker has promoted new energy buses and taxis in international markets under its strategy of promoting the electrification of urban public transportation. The strategy has been implemented in more than 400 cities in over 70 countries and regions.

“The current era presents the best opportunities for Chinese companies to go global, because our infrastructure is among the best in the world, our supply chain system is the most comprehensive, and our scientific and technological talent pool is on a par with the most advanced technology in the world,” Roborock’s Quan said.