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Chief Executive China (CEC) sat down with Fred Young, Founder and Managing Partner of Ocean Stone, to gain insights into the global expansion of Chinese brands. An expert in cross-border investment and operations, Mr. Young shared his perspectives on the strengths of Chinese brands, common misconceptions about them, and strategic suggestions for Chinese brands venturing overseas.
Fred Young previously served as the head of cross-border investments at Confitop Capital and was a founding member of Sky9 Capital. With over 15 years of entrepreneurial and investment experience, he now leads Ocean Stone, an internationalization service platform established in 2024 that supports enterprises in building overseas operational, marketing, and branding systems.
1. Key Distinctions in Product Globalization and Brand Globalization
CEC: For Chinese companies planning to set up overseas factories – particularly in Southeast Asia – what would you say is the biggest difference between focusing on product export versus building a global brand?
Fred Young: For OEM or ODM providers, the approach is fundamentally production- and order-driven: they set up facilities abroad primarily to fulfill orders from European or American clients. Their core philosophy can be summarized as “if there’s an order, we’ll produce it.”
The fundamental distinction lies in the underlying mindset. Factory-oriented sellers focus almost exclusively on questions like “Is the product cheap enough?” and “Will it sell?” This leads to an endless cycle of cost-cutting competition, often at the expense of product innovation, user positioning, and thoughtful feature design. In some cases, they might even strip down functionality to save a few cents – completely overlooking the actual needs of the target end-users.
CEC: So at its core, is this about the difference between a B2B mindset and a B2C mindset?
Fred Young: Exactly. A purely B2B focus often leads to intense, margin-eroding competition – cutting prices from five cents to four cents, then three cents, until no one makes a profit. In contrast, a B2C mindset offers far greater potential. You can sell a product for US$5 or even US$10 and still attract a strong customer base if you’re offering genuine value. That’s where the real opportunity for branding lies.
Brand owners don’t really care where the factory is located. If you visit major retail chains in the US, you’ll see a huge volume of products – aside from apparel, which faces more policy constraints – that are made in China. This is especially true for categories like consumer electronics, home appliances, and toys, which are almost entirely produced in Chinese factories. So, in my view, the factory’s location is irrelevant. What matters is the brand mindset.
In other words, only by building a brand can a company truly participate in the global distribution network – in Europe, the US, and beyond – rather than remaining stuck in the manufacturing stage alone. That shift represents a significant leap forward.
2. Chinese Brands Going Global: Where Do the Strengths Lie? How to Overcome the Key Challenges?
CEC: From your observations, what are the core advantages Chinese companies have when expanding overseas? And what are the major hurdles they face?
Fred Young: There's a well-known framework called the Smile Curve: in the manufacturing value chain, the highest value is captured at the two ends – one is R&D and innovation, the other is sales, marketing, and branding – while the middle (actual production and assembly) generates the lowest value.
China has already pushed manufacturing efficiency and scale to the absolute limit. In R&D, the country is now among the global leaders in most fields – except perhaps AI, where the US still holds an edge. Virtually every other domain sees China at or near the forefront. The next frontier, then, is seizing control of the downstream end: markets and brands. This remains China's relative weakness.
One of the biggest shifts when moving into true branding is creating emotional attachment and identity resonance with users. Many early Chinese players did quite well overseas, but they mostly followed a channel-first, distribution-heavy approach. They pushed products out through channels and scaled reach, yet invested little in genuine brand-building. Consumers might see the product as familiar and readily available, but few feel any real premium or loyalty toward it. If a competing brand of similar price appears on the shelf tomorrow, shoppers won't go out of their way to hunt for the original – they'll simply switch.
By my definition, brand perception unfolds in three progressive levels:
- Level 1 – Basic recognition: Users trust that the brand delivers consistent quality and value – you get exactly what you pay for. This is the most elementary form of brand equity.
- Level 2 – Value alignment: Users connect with the brand’s philosophy, understand its story, and embrace its core beliefs. This creates a natural preference and choice inertia. For many Chinese companies accustomed to a “move product, close deal” mindset, this layer feels unfamiliar – but it’s table stakes for Western consumers.
- Level 3 – Deep emotional/identity bonding: Users tie the brand to personal ideals, aspirations, or even a sense of higher purpose. They willingly pay a premium, and in extreme cases will even support the brand above their own self-interest (think of the national pride that fuels many Huawei fans). Reaching this tier is already elite territory, even for everyday consumer goods.
European and American consumers place extremely high demands on identity fit and value congruence. They care deeply about whether a brand champions sustainability, shows genuine care for people, contributes to social causes – and sometimes even where it stands politically. One US brand strategist once admitted to me that a shallow or underdeveloped brand narrative had capped their growth and prevented any real breakthrough.
CEC: At its core, Western consumers place far greater emphasis on identity alignment.
Fred Young: Exactly. To a significant extent, yes.
We see similar patterns even in China. For instance, users of Xiaomi and Huawei in the domestic market exhibit very strong senses of identity and belonging. Each brand has carved out and differentiated its own user base – groups that represent certain social strata, tastes, and values. People feel a real affinity and pride in being part of “their” tribe.
Another example: the concept of the “kill line” has recently made its way into mainstream Western discourse, covered by The Economist and The New York Times. (Translator’s note: This term – originally from gaming, describing a critical health threshold where a character can be killed with a single shot – has been adapted in China to highlight perceived fragility in parts of American society such as economic precarity, lack of safety nets, etc.). The fact that it gained enough traction to be covered by these elite outlets underscores a broader point: Western societies operate more on a “jungle law” dynamic – intense competition, less inherent security – so people feel a stronger need to band together, to find products, brands, or symbols that represent and protect the interests and values of their specific subgroup or tribe. In that sense, branding plays a powerful role in fulfilling this tribal or identity-based need.
In China, brand perception often stops at the level of identity recognition – without ascending to the higher plane of idealism or deeper spiritual attachment. Huawei comes closest to breaking through: for many users, supporting Huawei equates to supporting China's most vital private-sector innovation engine; it has become a form of spiritual or patriotic sustenance. Once a brand reaches this stage, users become willing to accept price premiums. They’ll pay more – even when cheaper alternatives exist – because they feel they’re supporting something bigger than themselves; loyalty can even outweigh personal economic self-interest. Outside of true luxury goods, it’s already exceptional for everyday consumer products to achieve this third, elite level of brand cognition.
CEC: What specific challenges do Chinese brands face when going global?
Fred Young: The biggest trap right now is that many teams try to simply transplant their domestic playbook overseas without adaptation. They assume “what worked amazingly at home will obviously crush it abroad.”
A classic case I’ve seen: a brand that was performing well on Douyin in China, pulling in roughly RMB700–1,000 million in annual sales. The team thought, “We’ve mastered short-video live commerce here – why not just replicate the exact same model on TikTok overseas?” But they soon discovered that the TikTok ecosystem abroad operates on completely different rules. Even very successful overseas brands on the platform might only do about US$5 million a month in many categories. Pure “hard-sell, flash-deal, live commerce” tactics that dominate in China often feel pushy or out of place abroad. The results were disappointing.
The real path forward is much more demanding: you have to deeply understand what overseas users actually want and need, then build or adapt products specifically for those differences. Add features that genuinely solve local pain points, and only then layer on marketing that resonates in that cultural context. In other words, success comes from identifying and leaning into country-specific or region-specific nuances – not from the naive belief that “if it sells like crazy in China, it will sell the same everywhere else.”
Let me give you a concrete success story: Momcozy, a maternity and baby products brand.
It started in a very traditional industry, but instead of copying domestic best-sellers, the team did real homework on target markets (mainly Europe and the US). They noticed a key behavioral difference: unlike Chinese mothers, who commonly follow the postpartum confinement tradition and focus heavily on rest and recovery, most Western mothers don’t have that custom. They tend to be much more active during the breastfeeding period – working, running errands, multitasking, etc.
Spotting this gap, Momcozy developed a hands-free, wearable/shoulder-strap-style breast pump that lets moms pump while doing other things. It solved a real, everyday frustration in a way that felt tailor-made for Western lifestyles. The product took off quickly in those markets.
From that single differentiated hero product, they methodically expanded the category – deepening assortment, building a fuller maternity and baby ecosystem – and turned Momcozy into a genuine platform brand in the space. In roughly three years, they scaled annual revenue past RMB2 billion, with exceptionally fast growth.
CEC: Earlier, one of our speakers mentioned that going global requires shifting from merely "selling products" to "integrating" – understanding local culture and participating in community activities to truly be accepted by the target market.
Fred Young: I completely agree.
Take the Middle East, for example. Ramadan is central to the culture there. Many brands don't fully grasp the significance of Ramadan, but if you want to enter that market, you must understand its cultural context. You need to engage with local traditions, design products that align with their values, and participate in their religious and cultural events.
To succeed in a market, you should ideally spend significant time there. The simplest approach? Start by living there for three months. In the first month, you adapt to daily life. By the second month, you begin to integrate into a small community. And by the third month, you start building connections and receiving real feedback. Only by immersing yourself in local life can you truly understand what people want. That’s when your perspective on the market fundamentally changes.
Every time I visit the US, I walk through physical stores to see which products are selling and which aren't. I buy something, ask the cashier about sales trends, and talk to the store manager about what’s new. Gradually, you build a deeper understanding of the local market. Or take my friend who sells fishing gear in the US – I encouraged him to attend every major fishing competition there. By going to them all, he met top anglers – potential influencers and key contacts – simply by becoming part of their world. That's how you build a brand authentically.
Overseas markets are far less saturated than China’s. From a product perspective, there’s still ample unmet demand. So we can afford to move thoughtfully – identify those nuanced gaps, understand real needs, and then position your brand to meet them.
3. Manufacturing in Southeast Asia: A Strategic Supplement for Resilience, Not a Replacement
CEC: Is moving production to Southeast Asia an effective way to reduce risks and enhance supply chain resilience?
Fred Young: The shift of manufacturing to Southeast Asia was largely a temporary, phase-driven response – something many felt compelled to do during the Trump-era tariff hikes. Now that US–China relations have entered a relatively stable period, the urgency behind that move has diminished.
That said, it’s not without its value. US policy remains uncertain – who knows when the next wave of China-targeted measures might emerge? So, maintaining a presence in Southeast Asia does add strategic diversification.
Currently, we’re hearing two very different narratives. Some factories in Southeast Asia report full order books and real demand. Yet other companies have encountered instability – delays, inconsistent quality, and unreliable output. In the end, after weighing the options, many buyers still return to China, which remains the world’s most stable, high-quality manufacturing base.
Looking further ahead, as worker skills improve and infrastructure develops, Southeast Asia has the potential to become a new global manufacturing hub – but that will take a long time. Notably, many key operators in Southeast Asian factories are still Chinese enterprises, effectively serving as “overseas branches” of China’s manufacturing ecosystem.
Therefore, establishing factories in Southeast Asia is one way to build resilience – but it is by means a replacement for China’s core supply chain.
There are three fundamental reasons it can’t replace China: first, the more relaxed work culture in parts of Southeast Asia means less willingness to work overtime and far lower intensity compared to China; second, frequent extreme weather such as typhoons regularly disrupts production stability; and third, political uncertainties continue to impact supply chain security.
In short, it’s unwise to put all your eggs in one basket domestically – but moving everything to Southeast Asia is equally unrealistic. The practical approach is to retain core production capacity in China for stability, while using Southeast Asia as a strategic supplement for diversification.
CEC: So Southeast Asia is one basket – just not the best or only basket.
Fred Young: Exactly.
4. The Core of Global Success: Localization Capability, Not “Going Global” Itself
CEC: What would you say is the main reason behind the success of Chinese companies that have gone global? Is it the act of “going global” that makes them successful, or is it that they already possess the capability to succeed overseas?
Fred Young: I would say that expanding globally is a high-risk venture that requires a fundamental shift in mindset – a process that’s often painful, full of setbacks, and comes with considerable cost. You’re looking at an investment of at least RMB10 to 20 million just to get started. That covers building a brand team, stocking inventory for overseas channels, redesigning product packaging – and if things don’t work out, you still have to deal with leftover stock. Because of this, going global is really only suited for companies that are thoroughly prepared. It’s not a must for everyone.
There’s really only one reason why Chinese companies that have succeeded overseas have done so: they’ve mastered localization. That’s absolutely crucial. You have to localize your product first, then think about scaling globally – you can’t just take a product made for China and expect it to work everywhere. That’s not realistic.
The problem is, most companies start with a product first, then look for a market – they put something on Amazon and see where it sells. That approach isn’t bad, but it doesn’t build any competitive moat. If you succeed on Amazon, you’ll likely be copied by competitors within three months.
The real barrier lies in building brand equity, and that takes three to five years: moving users from awareness to understanding to trust takes at least two years alone. So, whether a Chinese brand can endure the long, quiet period of investment – that’s what ultimately determines its success or failure overseas.
5. Partnering with Distributors/Retailers: Trust First, Avoid the Pitfalls
CEC: How should Chinese brands communicate and build partnerships with distributors and retailers? What are the common pitfalls?
Fred Young: In the early stages, the most effective way is to actively participate in industry trade shows to build connections. Distributors and retailers value stability and trust above all else – consistent product quality, reliable supply, and dependable management are far more important than just low prices. Therefore, building long-term trust is the core foundation for any partnership.
Common Pitfalls:
- Focusing on Breaking the Ice but Neglecting Follow-Up: After winning over a distributor with a hot-selling product, many brands fail to track the subsequent sales details. Is the distributor's sales model aligned with the brand's positioning? Is the brand message being conveyed accurately? These factors directly impact the brand's future growth.
- Chaotic Inventory Management: Using the same inventory pool across multiple channels often fails to meet the specific supply needs of distributors, leading to broken partnerships.
- Conflicting Pricing Strategies: Frequent price fluctuations on platforms like Amazon (e.g., US$5 today, US$3 tomorrow) are common. If brands try to apply this same pricing logic to offline channels, no distributor will be willing to accept it.
CEC: So, there needs to be a conscious effort to differentiate products and pricing between online and offline channels?
Fred Young: Exactly. This can be achieved through different SKUs or differentiated pricing strategies. However, most brands currently do not handle this aspect well enough.
