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In recent years, Chinese industrial enterprises have seen sustained momentum in overseas expansion. What was once an optional growth pathway has now become a strategic imperative. In 2025, China’s outward foreign direct investment (OFDI) flows reached 174.38 billion US dollars, representing a year-on-year increase of 7.1 percent. China’s OFDI stock has remained among the top three globally for nine consecutive years. Of this total, non-financial OFDI accounted for 145.66 billion US dollars, with manufacturing and other real-economy sectors playing a dominant role in overseas expansion. Emerging fields such as information transmission and green low-carbon industries have maintained strong growth momentum. At the same time, overseas revenues of listed companies have continued to rise steadily, with annual overseas income expected to exceed 11 trillion yuan, underscoring the resilience of China’s global industrial expansion.
China’s industrial overseas expansion has now moved well beyond the early model of product exports and original equipment manufacturing (OEM). It has entered a new phase characterized by the coordinated globalization of production capacity, technology, standards, and industrial ecosystems. This evolution has opened a more resilient and dynamic pathway within the ongoing restructuring of the global value chain.
Phase 1: Product Export
From the early years of reform and opening up through the early twenty-first century, overseas expansion by Chinese industrial enterprises was primarily centered on product exports. Enterprises entered global mid- to low-end markets by leveraging cost advantages, relying heavily on OEM and original design manufacturing (ODM) exports. Core competitiveness during this phase was largely concentrated on price and scale efficiency.
Products during this stage were predominantly labor-intensive and resource-intensive, including home appliances, hardware, and light industrial machinery. Early home appliance manufacturers accumulated production experience and capital through OEM contracts with overseas brands, gradually transitioning to large-scale product exports. Hardware manufacturers, supported by China’s comprehensive industrial supply chain, delivered affordable and reliable products to global markets, completing the initial phase of globalization.
This stage of overseas expansion was defined by light asset structures, low entry barriers, and broad market coverage. However, it also exposed structural weaknesses, including limited independent branding, dependence on externally controlled core technologies, thin profit margins, and positioning at the lower end of the global value chain. These limitations reduced enterprises’ ability to absorb market volatility and respond effectively to trade barriers.
Phase 2: Production Capacity Export
As global trade protectionism intensified, Chinese industrial enterprises began shifting from product exports toward production capacity exports. This phase focused on establishing overseas manufacturing facilities to enable localized production and sales, mitigate tariff risks, reduce logistics costs, and improve responsiveness to local markets.
Industries driving overseas expansion during this phase included equipment manufacturing, building materials, automobiles, and electronic information, all of which are capital- and technology-intensive. Enterprises leveraged China’s mature production technologies and integrated industrial ecosystems to replicate complete production systems abroad.
Representative examples include Fuyao Glass, which established production bases in the US, Germany, and other markets to enable local production and supply, effectively reducing tariff exposure and logistics costs while strengthening its global market position. Yadea developed and commissioned production facilities in Vietnam and Indonesia, with planned annual capacities of 250,000 units and 300,000 units, respectively, aligning closely with Southeast Asian market demand. Its overseas retail network has expanded to more than 40,000 terminal stores. Sany Heavy Industry established research and development centers and manufacturing bases in Germany, achieving a model of global resource integration combined with regional customization, with overseas revenue now accounting for approximately 45 percent of total income.
Phase 3: Ecological Export
In recent years, as technological capabilities and brand influence have strengthened, Chinese industrial enterprises have entered a more advanced stage of overseas expansion focused on ecological export. The objective is to build end-to-end overseas ecosystems spanning research and development, manufacturing, sales, services, and supply chains. This marks a transition from exporting products to delivering integrated solutions and industrial standards.
At this stage, enterprises are no longer limited to exporting individual products or production capacity. Instead, they extend China’s industrial standards, management practices, and supply-chain coordination capabilities globally through technology licensing, joint ventures, strategic partnerships, and platform-based ecosystems, contributing to broader industrial upgrading.
This trend is particularly visible in emerging industries. While establishing battery manufacturing facilities in Europe and North America, CATL (Contemporary Amperex Technology Co., Limited) has simultaneously developed battery recycling facilities and research centers, creating a full lifecycle ecosystem encompassing production, usage, and recycling. The Haier CosmoPlat industrial internet platform now connects approximately 900,000 enterprises worldwide, enabling real-time collaboration among transnational factories through digital twin technologies and extending China’s industrial internet expertise to global manufacturers.
Seizing Opportunities and Addressing Challenges in Overseas Expansion
Looking ahead, green transformation, digital empowerment, and expansion into emerging markets represent three core opportunities shaping the next phase of high-quality overseas development for Chinese industrial enterprises. At the same time, the path forward presents growing challenges. Rising trade protectionism, heightened compliance requirements, and volatile policy environments continue to increase costs and uncertainty. In parallel, enterprises face intensifying competition in core technologies, shortages of high-end talent, limited global brand recognition, and vulnerabilities in supply-chain resilience.
To navigate this environment of converging opportunities and risks, enterprises must accelerate three key transformations. First, they must shift from isolated international expansion toward coordinated, group-based overseas strategies that leverage industrial chain synergies. Second, they must evolve from exporting production capacity to exporting standards, strengthening their role in shaping international industrial frameworks. Third, enterprises must move beyond short-term profit orientation toward value coexistence, deepening local market integration, reinforcing internal competitiveness, balancing brand development with supply-chain resilience, and systematically addressing the structural challenges of global expansion.