Why are Chinese brands “exodus to overseas”?
Whether they're small manufacturers or tech companies, many Chinese businesses are seeking opportunities overseas.
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Stella and Amy recently had an in-depth conversation with Abby, a marketing expert with over 14 years of experience in performance and brand marketing across Asia. Abby shared valuable insights into the concept of "Chuhai", or "出海" in Chinese, a popular strategy among Chinese companies that means "exodus to overseas" – or expanding beyond China's domestic market.
The Conversation
Stella: Many Chinese brands are trying to expand their business to overseas, more commonly referred as Chuhai (exodus to overseas) in Mandarin business circles. I recently spoke with some small manufacturers in China who are eager to expand globally. They want to escape the intense competition and price war in China, where profit margins are constantly squeezed.
Amy: Taiwan has a similar situation, but for different reasons. Many manufacturers have been in the OEM role for a long time. The new generation owners, who often inherited the businesses from their parents, want to create their own brands and expand to other countries. It’s also Chuhai.
Abby: We work with many Chuhai brands. They come to us saying, "We're number one in our category in a certain market. What should we do next?" I tell them it's time to focus on brand-building. They're realizing that while they might be category leaders, their brand isn't as well-known. They're asking, "Why can't we build our brand so users will pay more for our products?" It's a big trend among Chinese brands going global.
Amy: So they're good at building the functions and features, but not so much at the emotional branding?
Abby: Yea. Many Chuhai companies excel in function and features. I really liked how Dentsu (leading marketing agency in Japan) worked with Japanese brands like Sony in their global expansion. It wasn't called Chuhai ("going overseas") - it was part of a larger globalization trend. They helped their client navigate new markets while maintaining their essence.
I prefer using the term "globalization" instead of "Chuhai." It feels more inclusive and less aggressive. After all, when Coca-Cola expanded beyond the US, we didn't call it “going overseas" or “exodus” – it was globalization.
The Cocoon
Chinese business seek opportunities overseas for healthier margin. Whether they're small manufacturers or tech companies, many Chinese businesses are seeking opportunities overseas.
A few reasons why Chinese companies want to “go out”:
Users with willingness to pay
A big driver of “Chuhai” for tech companies is the struggle to make SaaS (Software as a Service) models work in China and many other parts of Asia. SaaS users in the U.S. and Europe usually have higher willingness to pay for subscriptions, while many Asian users tend to avoid paying by sticking with manual processes or finding free alternatives. SaaS businesses, in particular, see better chances abroad.
Less Competitive Market
Chinese manufacturers have become competitive in certain products, especially consumer goods. Now, they are looking to sell more at higher prices by building up a brand overseas.
“Chuhai” or “Globalization”
Stella and Amy found one point raised by Abby particularly interesting. Instead of using “Chuhai,” or “exodus to overseas”, the phenomenon might be better described as globalization. "Chuhai" can sound overly aggressive, or even colonial (as Amy noted), as if companies are trying to "conquer" foreign markets, when in fact they are simply looking to integrate into the global economy. A more neutral term, like "globalization," might be more appropriate.
Case studies mentioned in our conversation with Abby
A Chinese Portable Charger Manufacturer
Abby had a client that made portable chargers. When they ventured overseas, they were reviewed by a popular hardware tech media outlet. They compared this client's product with a big-name brand, putting them side by side. The verdict? How could it be possible that this brand, at just one-fifth of the price, outperformed the big brand in every category? Even the design was better! And Abby couldn’t agree more—this product's overall aesthetics and user experience were far superior. So, when Abby started working with this client, she was genuinely excited. She told them, "You really can dream big!"
Like this portable charger manufacturer, Chinese manufacturers often have great products but struggle to compete with more well-known brands that can charge ten times their price. Even though customers love these Chinese products, it can be frustrating to sell them at such a low price.
A Chinese Tech Startup
Stella visited China during the summer and spoke with many people in the tech industry over there, where "Chuhai" is a hot topic. However, tech companies face a unique and somewhat awkward situation when going global. They're often hesitant to highlight that they are Chinese companies, especially since they primarily expand into Western countries, like the U.S. For example, companies like TikTok and Shein face challenges when entering markets like the U.S., where political and other factors make it difficult. As a result, these companies tend to downplay their Chinese origins during their "Chuhai" journey.
CHAGEE - A Milk Tea Brand
Recently, CHAGEE, a well-known Chinese milk tea brand, has been making a big comeback in Singapore, and it’s becoming super popular. But this is actually not their first “Chuhai” attempt.
A few years ago, CHAGEE had already made its way to Singapore. At that time, they worked with a local distributor. But unfortunately, the distributor didn’t maintain the quality up to the brand’s standards, or maybe there were deeper issues behind the scenes that we couldn’t see. As a result, the tea shop ended up closing, leaving a lot of fans disappointed.
This year, they’re back and have opened a new shop. People were curious and asked, “Wait, didn’t this brand already open here before?” CHAGEE responded by telling their story again, explaining that there were some unhappy experiences in the past, but they’re making a fresh start in Singapore this time.
Chuhai & Branding
Chinese brands usually offer competitive prices to customers. But over time, you don’t want to be just another brand that shows up at the top of the list when you sort by "price low to high" on Amazon. Yes, you would have good sales, but your brand wouldn’t be considered premium or desirable. Chinese brands need to focus on branding rather than replicating price wars overseas.
One interesting observation is that Chinese brands are good at starting with “technical marketing” like performance marketing and SEO, but struggle more when coming up with a good brand story or a unique brand position and message. We can talk about that more in the future.
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We are Stella and Amy. We share firsthand stories and perspectives that are either lost in translation or simply inaccessible to you.