Chinese companies are accelerating their push for global expansion, driven by national strategies, capital flows and the restructuring of global supply chains, according to a new report.

The report, released by Deloitte China on Tuesday, showed that in the 2024 fiscal year ending on May 31, the firm assisted more than 2,000 Chinese companies in expanding their businesses across 96 countries.

After years of development, Chinese companies expanding overseas are shifting from merely seeking new markets to integrating global supply chains and building international brands, the report added.

Despite the rapid acceleration, the road to globalization is not without obstacles. According to Deloitte, the instability of international markets, increasing compliance requirements, and fierce competition in foreign markets present significant risks for Chinese firms. Additionally, adapting to local cultures and navigating different regulatory environments also pose challenges to companies venturing abroad.

Alan Wang, Deloitte China Northern Region managing partner, highlighted that the pace of Chinese companies' internationalization has significantly increased over the last few years.

"The past two to three years have witnessed a sharp rise in Chinese businesses expanding overseas. We've seen that flights to Southeast Asia, the Middle East and Mexico are packed with Chinese entrepreneurs and investors looking to tap into new opportunities," Wang said.

He noted one of the key drivers for Chinese firms' international push is the search for new growth opportunities outside of China's domestic market. "In many industries, domestic competition has become fierce. Companies are increasingly looking abroad for new avenues of growth," Wang added, stressing the importance of the "out or out" strategy — essentially, firms must go global or risk being left behind.

"Since the beginning of 2023, nearly all Chinese companies around us regarded going global as a very important strategic decision," said Collin Jin, deputy president of CPA Australia's East and Central China Committee. "Due to China's massive production capacity, the domestic market may face competition in many niche sectors. Thus, a rising number of Chinese companies choose to leverage their strong production and service capabilities to explore broader markets.

"From the perspective of future development opportunities, Chinese companies particularly need to focus on overseas markets, especially key destinations like the Association of Southeast Asian Nations member states, the Middle East, and Central and South America," he added.

In fact, Chinese companies are also finding that international expansion is fraught with challenges, including compliance concerns and brand building.

Wang noted that ESG considerations are becoming increasingly crucial for Chinese firms operating abroad. "In many countries, the focus is shifting from purely profit-driven goals to considering the impact of business on the environment and society. Chinese firms need to integrate these concerns into their strategies if they are to succeed internationally," he noted.

Given the continued growth trend, Wang expects the momentum behind Chinese companies' global expansion will continue for the foreseeable future.

The focus, however, will shift from merely entering new markets to refining business operations and organizational structures for better efficiency and sustainability. Companies will need to build stronger global supply chains and focus on long-term resilience rather than short-term market entry, he added.

According to the report, Deloitte's ongoing efforts to support Chinese companies in their global endeavors include tailored solutions that address everything from business model design to digital transformation, and organizational restructuring.

With its extensive global network and expertise, Deloitte said it is positioning itself as a key partner for Chinese companies aiming to thrive in an increasingly complex and competitive international landscape.