Chinese firms eye global expansion with HK as primary springboard

Hong Kong remains the top favourite springboard for Mainland Chinese enterprises venturing into global markets, with 83% of surveyed businesses identifying the city as their preferred service platform, according to a report by the Hong Kong Trade Development Council (HKTDC).

The comprehensive study of more than 2,000 internationalised Mainland enterprises reveals aggressive global ambitions. Overall, 82% of respondents plan to expand their existing overseas operations, while 63% intend to launch entirely new ventures abroad. Key operational goals driving this push include enhancing overseas sourcing, expanding international sales networks, and bolstering cross-border technology cooperation programs.

Markets along the Belt and Road initiative emerged as the primary focus, favored by 94% of respondents—a sharp increase from the 73% recorded in a comparable 2023 survey. Southeast Asia also ranked at the top of the agenda, with 91% prioritising expansion within ASEAN nations, led specifically by Singapore, Vietnam, Thailand, and Malaysia.

Beyond Asia, interest in emerging markets saw a dramatic surge: appetite for expansion into the Middle East jumped to 46%, while interest in Latin America doubled to 34%. Meanwhile, nearly half of surveyed firms continue to target mature Western markets across Europe, the US, and Canada.

However, going global presents significant operational hurdles. Beyond shifting trade policies, Mainland enterprises cite intensifying regional competition, geopolitical tensions, rising domestic production costs, and complex tariff and non-tariff trade barriers as major concerns.

To counter these headwinds, companies are prioritising production efficiency, stricter cost management, and robust risk mitigation. Crucially, 61% of expanding firms plan to establish two to three distinct business functions abroad simultaneously, extending their reach into higher value-added stages of the global supply chain.

Navigating these intricacies requires specialized professional support. When seeking a platform to facilitate international growth, 83% of respondents named Hong Kong as their top choice, outranking domestic Mainland platforms and regional competitors such as Singapore.

Firms rely on the city for a broad range of services, including cross-border financing, legal and accounting advisory, risk management, supply chain optimisation, research and development, and ESG compliance.

Highlighting the upside for Hong Kong, Bruce Pang, director of HKTDC Research, said: “With the overseas expansion strategies of Mainland enterprises now extending to supply chain integration, cross-border investment and higher value-added business activities, the need for highly professional support services has continued to grow."

"As the first-choice professional services hub for the majority of the surveyed enterprises, Hong Kong’s unique connectivity and unrivalled expertise have ensured it is playing an ever more significant role in helping Mainland business seize global opportunities," he added.

Pang pointed out that they chose Hong Kong as a top destination that can provide a wide range of professional services and financial services. “Hong Kong is a super-connector, super value-adder, actually providing a full range, full-scale of services, including financial services, legal, accounting, as well as risk management, ESG, and more.”

Wing Chu, deputy director of HKTDC Research, said: “Most enterprises pursuing international expansion plan to develop two to three overseas business functions (61%), indicating their intention to extend along different stages of the global industrial and business value chain. During this process they face major challenges, including difficulty coping with rapidly changing market uncertainties, intense competition in overseas markets, and insufficient capital to adjust business operations and supply chains. These challenges underline the growing need for professional services support.”

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