In the context of increasing global competition, enterprises are facing more fierce market challenges when going overseas. Therefore, going deep into the local market, understanding customer needs, and strengthening brand communication are the keys to business success. This not only requires companies to deepen their presence in the local market, but also needs to manage the entire process from customer contact to sales and customer retention to better meet the needs of end consumers.
At the same time, the rise of emerging countries offers a significant cost advantage for companies to build localized supply chains. These countries often offer preferential policies to attract foreign investment, and the cost of labor and raw materials is significantly lower than in developed countries, so domestic companies see opportunities to shift production capacity to these regions. Whether in emerging markets or mature economies, the layout of localized supply chains can promote the joint expansion of upstream and downstream enterprises, connect more industrial chain links, and thus create greater profit margins.
However, China's export-oriented enterprises face multiple challenges in overseas markets, such as green barriers, technical trade barriers, import restrictions, and tariffs. In order to cope with these barriers, enterprises need to establish overseas manufacturing and supply chain systems, especially in developed countries and regions such as the United States, the European Union, and Japan, to avoid high countervailing and anti-dumping duties by building factories in neighboring countries and regions. This strategy will help companies gain a larger market share and enhance their competitive advantage.
According to KPMG's report, Chinese manufacturing companies usually set up branches as the basis for overseas marketing, and in the process of overseas business expansion, in addition to adopting greenfield investment to build factories overseas, they also actively seek diversified models such as overseas joint ventures and mergers and acquisitions to meet different market needs and strategic goals.
Figure: Establishment of Overseas Institutions of Chinese Enterprises
KPMG's analysis points out that marketing overseas has become one of the key strategies for many manufacturing companies to explore the international market. According to the 2023 survey data, about 60% of manufacturing companies plan to establish marketing centers overseas to improve their sales and service capabilities. Partnering with local leaders has become an important competitive advantage for manufacturing companies to successfully go global. In the passenger car industry, for example, sales and after-sales service are crucial. For example, Xpeng Motors has successfully entered the Norwegian, Dutch, Swedish and Israeli markets through the model of cooperation between its own stores and dealers. Through the equity cooperation with Stellantis, Leapmotor leverages Stellantis' mature channels and strong supply chain resources to expand the market outside Greater China. In view of the fact that greenfield investment usually requires a long return period and has high operational risks, some manufacturing enterprises choose to integrate the resource advantages of the local industrial chain more quickly and efficiently through mergers and acquisitions or joint ventures.
In the process of promoting overseas layout, Chinese manufacturing enterprises need to make thoughtful decisions and meticulous management at every stage, from preliminary planning to specific implementation, to implementation and stable operation. KPMG pointed out that Chinese companies face seven key challenges in the process of going global, covering all aspects of planning, execution and operation. Specifically, the selection of overseas destinations is unclear, the overseas market entry strategy is difficult to decide, the progress of overseas expansion is not well controlled, the overseas operation coordination mechanism is missing, the supply chain planning lacks a global vision, the compliance risks are becoming increasingly complex and diverse, and the implementation of digital management is not satisfactory. These challenges require companies to make precise adjustments in the development and execution of strategies to ensure successful overseas expansion. For example, the positioning of enterprises going overseas is ambiguous: when enterprises go overseas, they need to clarify the goal of internationalization, and analyze the macro environment, trade policies and market competition maturity of overseas markets. If the company's analysis of these aspects is not in-depth and accurate, it may lead to ambiguity in the choice of destinations, which will affect the overall overseas strategy. Enterprises need to have in-depth market insights into the target market, including product positioning, target demographics, and competitiveness and price in overseas markets. If companies are ill-prepared for these areas, it can lead to ambiguous destination positioning.
Ambiguous destination positioning is a key problem that Chinese manufacturing enterprises need to solve when going overseas, which involves market selection, strategic planning, market insight and other aspects, and requires enterprises to conduct in-depth analysis and accurate decision-making.
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