Overseas expansion, how to do it?

In the most recent issue of the CEConlines Manufacturing Survey, we looked at companies' investment intentions and investment directions in the coming year. The survey received more than 200 qualified responses from export manufacturers. Among the questions about investing overseas, we have some unexpected and reasonable findings:

When asked, "Do you have any plans to invest overseas in the next year? ”, about 80% of the respondents said no, and 20% said they did. This is actually a very difficult result, indicating that one-fifth of the interviewed companies have already planned to "go out" or have already implemented this step. Going out has never been easy, especially for the vast number of small and medium-sized export manufacturing enterprises.

For the second question, "If overseas investment is to be made, what will be the main form?", 65% of the respondents said it was "set up a sales representative office overseas", and 11% said "set up an assembly center overseas" , "overseas mergers and acquisitions" accounted for 12%, "overseas establishment of R & D centers" only 4%.

Of course, it is easiest to set up a sales representative office

This seems to be a logical result, China's export manufacturing industry is basically a fully competitive industry, sales-oriented The genes are very obvious. Therefore, it is a very reasonable choice to obtain more and better orders from overseas customers by setting up a sales representative office. At the same time, the cost of setting up a sales representative office is relatively low. It can be done with a few people and a few grabs. Unlike The establishment of factories, mergers and acquisitions, and the establishment of R&D centers are so labor-intensive that they naturally become the first choice for companies to go overseas.

The assembly center is in line with the trend of industrial transfer

Of course, we also saw some respondents choose to set up overseas assembly centers. This is another trend. With the soaring manufacturing costs in China, China is no longer a depression of global costs. A recent report released by Boston Consulting Group stated that China's comprehensive manufacturing costs have almost caught up with the United States. Therefore, it has become a natural trend to gradually move labor-intensive industries out. We have been able to see more and more companies moving their factories to Vietnam and Cambodia in Indochina, India in South Asia, and Ethiopia in Africa.

This can be said to be the latest wave of industrial transfer in the world. Entrepreneurs in mainland China are following the path taken by entrepreneurs in Europe, America, Japan, Hong Kong and Taiwan. It is a large economy like China at the beginning of reform and opening up, with low cost, economic construction as the center, foreign investment friendly, and hard-working workers. For example, although India has a large population, its democratic system restricts the development of infrastructure, and workers have more demands; while Vietnam, although there are many people, is hostile to Chinese companies; and Africa is full of small countries and political instability. , the labor base is not large and the quality is not high, which restricts the pace of the successful transfer of Chinese industries, and may even become a "big pit" for Chinese enterprises.

At present, setting up an assembly center is a relatively safe practice. The assembly center is to assemble the parts, the technology is simple, the requirements for labor are not high, and the parts are basically imported, and the requirements for the completeness of the local industry are not high, and it is relatively easy to implement. Dongguan Huajian Group, one of the largest shoe-making companies in the country we interviewed, adopted such a strategy to successfully establish a firm foothold in Ethiopia and become a successful case of China's manufacturing industry going global. Among some of Global Sources' export manufacturing customers, some companies have begun to implement this strategy. For example, a company that makes charging equipment has set up core departments such as R&D and procurement in Shenzhen, the capital of electronics manufacturing, while the assembly line is located in Shenzhen. Africa has also made a good start in the processing of incoming materials from both ends.

Overseas mergers and acquisitions, overseas research and development, small and medium-sized enterprises can also do it

"Overseas mergers and acquisitions" is a high-sounding word. Some large central enterprises and some large private enterprises have indeed carried out vigorous overseas mergers and acquisitions. For example, Sany Heavy Industry and Zoomlion, the leaders in the domestic construction machinery industry, have all carried out large-scale mergers and acquisitions.

But in fact, overseas mergers and acquisitions are not only for behemoths, but also for a large number of export manufacturing enterprises of a certain scale. Now it is said that "Made in China" should evolve into "created in China" and "system" should be changed to "intelligence". Then there are many excellent R&D, design talents, teams, studios, enterprises, etc. overseas, which are candidates for mergers and acquisitions. Europe and the United States are also dominated by small and medium-sized enterprises. These small and medium-sized enterprises are also very strong in vitality and creativity. What they often lack is good engineering and manufacturing capabilities, which are the strengths of Chinese enterprises; and the largest Chinese enterprises going overseas. The problem is that localization is not enough. We should think about product design, marketing, etc. with Chinese thinking. If we can absorb excellent talents from overseas and local, we can obtain excellent complementarity.

Another consideration is the acquisition of brands. It is said that China is at the bottom of the smile curve, and it is beyond the reach of brands. In fact, we see that the economies of Europe and the United States continue to slump, and online retail has a serious impact on offline brands. Many small and medium-sized retailers and brand owners are not having a good time, and even some small European and American brands are facing the risk of closing their doors. At this time, if Chinese companies with certain strength can make mergers and acquisitions, cooperate, etc., they can take advantage of China's low-cost advantages to regain a city, and they can also "export to domestic sales", introduce overseas brands into China, open up new markets, and realize domestic and international sales. Walking on two legs in the market is also excellent.

The last is to set up a research and development center. This sounds even better. But in fact, many large Chinese companies are still figuring out how to set up R&D centers overseas. How to cooperate with top overseas scientific research institutions, how to network excellent R&D talents, etc., there is still a lot of homework to be done, and it is really successful. not much. In fact, as mentioned above, SMEs can take advantage of the resource of "overseas R&D" in a more flexible way. For example, by cooperating with overseas independent design teams, they can take advantage of their understanding of local market needs to create marketable products. product.