Chinese Firms Expand Global Reach as Domestic Economy Slows, Goldman Sachs Analysis Reveals

China’s Corporate Global Expansion Accelerates

Chinese companies are significantly expanding their international presence and profitability despite ongoing domestic economic challenges, according to a recent Goldman Sachs analysis. The report indicates that global profits are emerging as China’s newest growth engine, potentially reshaping the country’s economic structure.

China’s Corporate Global Expansion Accelerates
Domestic Challenges Drive Overseas Expansion
Strategic Shift in Export Composition
Overseas Investment and Supply Chain Diversification
Broader Economic Implications

Domestic Challenges Drive Overseas Expansion

Sources indicate that China’s economy continues to face a prolonged slump characterized by property sector difficulties, weakened consumer demand, and deflationary pressures. Analysts suggest this challenging domestic environment has prompted Chinese firms to seek growth opportunities abroad, where they’re finding substantially higher profit margins.

The report states that Chinese listed companies now generate approximately 16% of their total revenue from overseas operations, up from 14% in 2018. While this remains below the roughly 50% average for developed-market corporations, Goldman Sachs analysts project this share will continue growing by about 0.6 percentage points annually.

Strategic Shift in Export Composition

According to the analysis, China has moved beyond simply exporting low-cost manufactured goods. The country is now increasingly exporting services, technology, intellectual property, and cultural products. This transition represents a fundamental departure from the traditional “Made in China” model that dominated global markets for decades.

Goldman Sachs analysts note that Chinese exports now span diverse categories from traditional toys and furniture to advanced electric vehicles, lithium-ion batteries, and solar panels. The report indicates these products maintain competitive pricing advantages, reportedly priced 15% to 60% below comparable global alternatives.

Overseas Investment and Supply Chain Diversification

The analysis reveals China has strategically increased its overseas direct investment in recent years, particularly targeting emerging markets and Belt and Road Initiative countries. This approach reportedly enables Chinese companies to diversify supply chains, establish production capacity closer to end markets, and enhance overall business resilience.

American consumers have become increasingly familiar with Chinese brands like Pop Mart (creator of Labubu), Luckin Coffee, and Temu, which are exporting not just products but China’s digital business models internationally. The report suggests tariffs have had limited impact on this momentum, estimating that even 100% tariffs on Chinese exports to the US would reduce corporate earnings by only about 10% in the short term, as companies have diversified their supply chains and reduced US exposure to approximately 4% of sales.

Broader Economic Implications

Analysts suggest this global expansion could have significant economic consequences. As more profits flow from overseas subsidiaries, China’s gross national product may eventually outpace its GDP, similar to Japan’s experience following its asset bubble collapse in the 1990s. This shift could affect global markets as Chinese corporate earnings become less dependent on domestic demand and more correlated with international consumption trends.

The report highlights 25 leading Chinese companies across 12 industries that already generate about 34% of their revenue abroad. These firms, including Alibaba, BYD, and PDD Holdings, have seen their stocks rise nearly 40% year-to-date on average, according to the analysis.

Goldman Sachs analysts conclude that these trends are likely to continue, supported by Chinese companies’ comparative cost advantages and ongoing product quality improvements. The transformation marks a significant evolution in China’s economic development model as its corporations increasingly compete and thrive in global markets.