Beyond factories: how China’s trendy brands turn local success into global influence

With their domestic profits narrowing and production capacity expanding, China’s firms are continuing to widen their overseas footprints in search of new, more lucrative markets. In this series, we examine China Inc.’s next phase of “going global” and the complex, challenging international environment its companies have chosen to enter.\nOn a busy roadside in Riyadh, K-pop music – popular among the city’s youth – pulses from the speakers of Javis Wang’s bubble tea shop.\nHis stores have continually stayed ahead of local trends. Two years ago, few in Saudi Arabia had heard of Labubu – the toy by Chinese company Pop Mart, now a global phenomenon – but it was already available in his outlets.\nWang bundled the plush toys with milk tea, a marketing tactic common among Chinese drink chains. The promotion recently ended, but his Whoa Tea brand – now spanning 18 stores across the country – had sold tens of thousands of the figures, he said.\nThe 30-year-old Chinese national credited his success to a strategy many domestic brands have now perfected: tapping into the preferences and emotional needs of young consumers.\n“Saudi consumers tire quickly of the old. They’re going through a period of reform and opening. They accept new things very fast,” he said, adding that customers desire more than a cup of tea: they want places to take photos, socialise and enjoy novel experiences.\nTaking a proven Chinese strategy abroad mirrors a broader trend among firms that have found success at home. From milk tea chains to blind box toy brands, companies are leveraging the strategic flexibility honed during the country’s digital boom to scale rapidly overseas, aided by growing online sales, a maturing distribution infrastructure and shifting global perceptions.\nThey’re comprehensive players shaped by the internet era’s wild competition – and that makes them highly combat-ready as they expand globally\nLi Yang, Cheung Kong Graduate School of Business\nThe latest wave of expansion also indicates a strategic pivot. Rather than building hard assets like factories, many of these firms barely touch the production line, instead opening new stores abroad and exporting cultural products.\nExporting success\nFounded in Shenzhen in 2012, Heytea launched its first overseas outlet in Singapore in 2018. Today, it operates a growing international network of more than 100 stores across the UK, the US, Japan and other markets.\nAnother popular Chinese tea brand, Chagee, pursued a similar path. Established in 2017, it has 262 overseas stores – mostly concentrated in Malaysia, where it operates 196 shops, according to the company’s latest quarterly report published on Friday.\nChinese short-video platforms like ReelShort have also been able to export their domestic success. The “vertical dramas” they host – narrative series split into minute-long episodes characterised by frequent climaxes and plot twists – feature local actors to keep production costs low. The shows log hundreds of millions of views, boosted by heavy investments in social media advertising.\n“These newly global, light-asset firms were born in the era of Chinese internet commerce,” said Li Yang, associate professor of marketing at the Cheung Kong Graduate School of Business in Beijing.\n“They understand branding, cost control, full-spectrum supply chain management and online marketing. They know how to manufacture buzz. They’re comprehensive players shaped by the internet era’s wild competition – and that makes them highly combat-ready as they expand globally.”\n“China’s domestic market is extremely competitive. These companies have developed not only manufacturing and cost advantages, but also very strong survival instincts and operational capabilities.”\n\n\nThe domestic fresh-drink industry – characterised by made-to-order beverages and diverse flavours – has expanded rapidly since 2015. Tens of thousands of new businesses enter the sector each year, with nearly 60,000 stand-alone stores or companies launching in 2019 alone, according to a report by the China Chain Store and Franchise Association.\nBut many have since closed due to weak product renewal, while brands like Heytea – backed by superior quality, strong branding and innovation – have steadily increased their market share, the association said in a separate report.\nHeytea has taken its domestic strategy abroad, introducing more than 20 original drinks tailored to local tastes across various countries, according to an August report by China’s Market Regulation News, supervised by the State Administration for Market Regulation.\nBeyond product innovation, Liang Yan, a professor of economics at Willamette University in the US, credited the overseas success of Chinese brands to strong supply and distribution networks.\nQu Tian, founder of the industrial investment fund ATM Capital, echoed this view, highlighting the crucial role of digital platforms.\n“In recent years, e-commerce in Southeast Asia, along with the development of its supporting infrastructure, has grown very rapidly,” he said at the Caixin Summit in November. “Those who rely on these platforms to build brands or boost sales are now achieving very strong profitability.”\nPop Mart, the company behind Labubu, illustrates this model. Its interim report this year showed the firm leverages different platforms to tailor localisation strategies: using Amazon in the US and Europe, and Shopee and Lazada in Southeast Asia.\nThe new generation of Western youth doesn’t rely on mainstream media... They also have fewer preconceived negative impressions of China\nLi Yang, Cheung Kong Graduate School of Business\nThe debut of a giant Labubu float at the Macy’s Thanksgiving Day Parade in New York this year, held annually since 1924, symbolised the brand’s growing American presence.\nPop Mart has also established itself on TikTok in multiple countries, saying it aims to “build a high-quality content ecosystem by utilising creative live streaming campaigns to attract younger users, driving sales with compelling content while expanding brand exposure and engagement”.\nThe strategy appears to have paid off. The company reported unaudited revenue of about 13.88 billion yuan (US$1.96 billion) for the first half of this year, a 204.4 per cent year-on-year increase – far higher than the 62 per cent recorded in the first half of 2024.\nOverseas operations accounted for a larger share of overall revenue – about 40 per cent, according to its interim report, up from about 23 per cent for the same period last year. Online channels were a crucial driver, contributing between 35 and 59 per cent of revenue across different overseas markets.\nGlobal gains, local challenges\nGrowing international recognition has turned into a driver of expansion. Overseas trust in Chinese brands rose 20 percentage points from 2019 to 2024, the fastest among seven countries surveyed including Japan, Germany and the US, according to market research firm Ipsos earlier this year.\n“The new generation of Western youth doesn’t rely on mainstream media. They prefer mobile-driven, social media content,” said Li of the Cheung Kong Graduate School.\n“They also have fewer preconceived negative impressions of China, which creates opportunities for cultural soft power export.”\n\nPeng Peng, executive chairman of the Guangdong Society of Reform, a think tank affiliated with the provincial government, said the country’s steady climb up the export value chain – from low value-added products like textiles and toys to higher-end goods like machinery, home appliances, electric vehicles and lithium batteries – has “elevated China’s image as a global factory”.\n“At the same time, China has emerged as a major global source of outbound tourism, with Chinese visitors demonstrating strong consumer spending power in Western countries, significantly reshaping the image of China long held by developed economies,” he added.\n“These are the conditions that make it possible for ‘light-asset, culture-focused’ industries to succeed in going overseas.”\nBut opportunity comes with challenges. The saga surrounding Beijing-based ByteDance’s TikTok – unfolding amid escalating US-China tensions – underscores how overseas ventures risk entanglement in broader political and strategic rivalries.\nThe sustainability of rapid growth also remains uncertain. Some of the success of Chinese brands is driven by consumer curiosity, while their underlying models are relatively easy to replicate, Li said.\n“These brands are shaped by an internet-first mindset and are highly adept at viral marketing. The downside of this model is weak user loyalty.”\n“Without a solid foundation, early popularity can quickly fade, leaving the brand vulnerable to imitation, replacement or being eclipsed by other content,” he added, noting that Western production firms could easily copy the short dramas exported by Chinese companies.\n\n\n\n\nIn November, a team led by Tang Ya, former associate professor of finance at Peking University’s Guanghua School of Management, warned that geopolitical risks remain the biggest threat to domestic companies expanding abroad.\n“Enterprises must confront the uncertainty of the external environment”, they said in the report published by Xiang Shuai Digital Finance Studio.\nThe researchers urged firms to monitor policy signals and prepare risk-mitigation plans when acquiring strategic overseas assets, and advised businesses heavily reliant on a single market to diversify and avoid “putting all eggs in one basket”.\nThey also flagged cultural and value-driven tensions. Chinese companies accustomed to rapid expansion in a fiercely competitive home market could find their “efficiency-first” ethos clashing with expectations for fairness, shared gains and long-term community engagement, they said.\nThe team cited Germany’s century-old “hidden champions”, whose success came from reinvesting in local communities and embedding themselves in regional ecosystems.\n“When an ‘efficiency-above-all’ Chinese company enters such an ecosystem, it risks being viewed as a disruptive outsider whose fast expansion destabilises established balance and order,” they said, warning that this could trigger pushback and undermine business operations.\n