By Daniel Chng

As more Chinese companies accelerate their overseas expansion, many have learned the hard way that domestic strength does not guarantee global success. In fact, what works exceptionally well in China often does not translate effectively abroad. While Chinese firms have scale, speed, and operational efficiency, true global competitiveness requires something deeper: credibility, trust, cultural intelligence, and an ability to compete on international terms.

In this article, CEIBS Professor of Strategy & Entrepreneurship Daniel Chng examines the key challenges Chinese enterprises face in going global, and solutions that can help them build global competitiveness.

Key challenges Chinese firms face when expanding internationally

In recent years, Chinese companies have raced onto the global stage with astonishing speed. Armed with vast industrial capacity, cost advantages, disciplined supply chains, and strong state support, Chinese brands now dominate global markets in electric vehicles, batteries, solar panels, consumer electronics, household appliances, and drones. Ambitious firms, from BYD and CATL to Shein, ByteDance, Lenovo, Haier, and DJI, have carved out positions once unthinkable for emerging-market companies.

Yet despite this momentum, many Chinese firms are realising that expanding abroad is far more complicated than simply exporting products. These difficulties are not limited to the advanced economies of the United States and Europe, where geopolitical rivalry and regulatory scrutiny are intense. Even in Southeast Asia, Latin America, and Africa, regions where Chinese capital has flowed for decades, firms face rising skepticism, political pushback, and operational hurdles. The obstacles, though diverse, reveal a deeper structural challenge: China’s global footprint is expanding faster than its ability to adapt politically, culturally, and organisationally to the changing global markets it is trying to enter.

Misreading consumers and culture

One of the most persistent obstacles for Chinese firms abroad is the gap between Chinese business instincts and foreign consumer expectations. Companies accustomed to China’s colossal domestic market, where competition is cut-throat, product cycles are lightning fast, and digital ecosystems are deeply integrated, often assume they can simply transplant their formulas to new markets. But markets and consumers elsewhere respond differently.

Xiaomi’s struggle in Europe is a telling example. The company built its empire on a simple recipe: premium smartphone specifications, razor-thin margins, and an ever-expanding product portfolio tied to its ecosystem. That model won over millions of Chinese consumers, but in Europe, it ran into the entrenched brand loyalty and established ecosystems enjoyed by Apple, Samsung, and Google, where trust, after-sales service, and extended product cycles matter more than incremental gains in hardware and a less portable ecosystem. A similar misreading has hampered lesser-known Chinese EV brands in Southeast Asia. While BYD and SAIC’s MG have made inroads, many smaller players have found that low prices alone cannot overcome doubts about reliability or resale value, issues that carry greater weight for consumers in Thailand, Indonesia, and Malaysia than in China’s megacities. A simple value-based proposition can only get you so far.

Cultural gaps inside companies compound these issues. Chinese firms often bring a centralised, top-down management style to markets that require empowerment of local teams, stronger communication, and sensitivity to local norms. Huawei’s European subsidiaries repeatedly complained of decision-making dominated by Shenzhen headquarters and limited influence for local managers, frictions that impeded the firm long before geopolitical tensions peaked. This is no different from the age-old challenges confronting Chinese executives working in MNCs’ subsidiaries in China. New to global management, executives at Chinese firms have yet to comprehend these challenges fully. Furthermore, when it comes to African and Southeast Asian infrastructure projects, Chinese contractors have faced criticism for relying heavily on Chinese labour, maintaining limited local engagement, and failing to communicate effectively with host communities. These cultural missteps sow mistrust that no amount of engineering excellence or high-value offerings can offset.

The competitiveness and market-structure trap

Chinese firms are entering global markets at a moment when politics, overcapacity, and environmental pressures are reshaping competition. China’s enormous manufacturing base creates both strength and vulnerability. Overcapacity in solar panels, batteries, EVs, and household appliances has pushed companies to export aggressively, sometimes at prices that alarm international competitors and governments. This triggers anti-dumping investigations, political backlash, and protectionist responses.

Solar panel makers discovered this early. India, Brazil, and the United States all imposed tariffs to shield local industries from being crushed by Chinese imports. EV manufacturers now face a similar wall in Europe, where policymakers see the rapid influx of low-cost Chinese EVs as a threat to national industrial champions. Even in Southeast Asia, carmakers complain that Chinese competitors distort markets with subsidies and deep discounting.

Competition in overseas markets itself is fierce and, more importantly, different from competition in China. In Latin America, Japanese automakers still enjoy decades of accumulated goodwill. In Indonesia and Thailand, Toyota remains almost unbeatable. In electronics, Samsung and LG dominate perceptions of brand and value. Chinese firms often arrive with speed and scale, but without the long-term relationships, brand heritage, or distribution networks that incumbents possess.

Organisational growing pains

Beyond culture and market competition, many Chinese firms face constraints rooted in their organisational DNA. China’s corporate success was built on speed, scale, engineering-driven execution, and a brutal work culture. But global competition requires stronger governance, transparent accounting, robust compliance, effective risk management, consistent branding, cultural intelligence, and engaged overseas employees, all areas where many Chinese firms are still maturing.

Chinese technology company ZTE’s near-collapse in 2017 after violating US export controls exposed the risks of operating without rigorous compliance systems. Yet, few Chinese companies and executives have learnt from this experience. Several Chinese tech and manufacturing firms expanding into the EU have discovered that European requirements for ESG disclosure, data governance, and labour protections demand capabilities far more complex, where regulations are clearly articulated, meticulously monitored, and strictly enforced, than those needed in China, where strategic ambiguity is often the norm.

Branding also remains another weakness for many Chinese firms. While some firms, like Lenovo, Huawei, and BYD, have made significant strides, many Chinese firms still compete primarily on cost rather than on trust or emotional connection. In markets like Europe, where brand identity and heritage matter enormously, this is a severe handicap. Even in Southeast Asia, where Chinese brands are more familiar, Korean and Japanese companies often retain a halo of quality and reliability that Chinese brands cannot yet match, especially in many emerging markets.

Localisation is yet another recurring blind spot. Too many Chinese firms fail to tailor their products, services, or management structures to local conditions. They send Chinese executives rather than cultivate local leadership, launch so-called “guochao” products designed to cater to Chinese consumers and trends, or fail to invest in after-sales service. Didi’s troubles in Latin America, where Uber remains dominant despite weaker local roots, underscore the importance of local adaptation, even for Chinese firms with superior technology and scale.

Regulation, politics, and the geopolitical narrative

Beyond cultural, market, and organisational frictions, the most formidable barriers facing Chinese firms overseas arise from the convergence of regulation, politics, and geopolitics. While such issues are frequently discussed among Chinese officials and executives, what these issues actually mean in foreign markets is far less understood by many Chinese business leaders, who tend to interpret them through China’s domestic narrative rather than through the perspective of foreign stakeholders. A telling example comes from the many “chuhai”, or “Going Overseas”, forums held across China over the last year. These events often feature Chinese experts and executives sharing their views of globalisation with hardly any foreign experts present. This stands in contrast to my time in Korea during its phase of rapid global expansion throughout the 2000s, when foreign experts were frequently invited to help Korean executives understand globalisation from an outsiders’ perspective. Without this external perspective, it is unsurprising that Chinese firms and their executives continue to struggle overseas.

More significantly, in advanced economies, Chinese companies now face screening mechanisms and national security scrutiny that go far beyond ordinary commercial policy. Europe and the United States have tightened investment reviews, expanded data rules, and imposed sweeping restrictions across sectors from telecoms and AI to EVs, batteries, and green technology.

Huawei’s exclusion from Europe’s 5G networks exemplifies the dilemma: it was not a question of technological capability but of geopolitical trust. TikTok, with ByteDance as its controlling shareholder, continues to face investigations in Washington and Brussels over data access and alleged state links. Shein, Temu, and other fast-growing Chinese consumer platforms are regularly scrutinised for poor supply chain practices and labor standards. Even firms with narrow technical mandates, such as Nuctech, which supplies airport scanners, have been barred not on performance grounds but on fears of political influence.

This dynamic increasingly extends into emerging markets as well. Governments in Southeast Asia, India, and Latin America have introduced local-content rules, retaliatory tariffs, or industrial policies to protect domestic industries from what they view as Chinese overcapacity and price pressure that harm their domestic development agendas and local firms. The European Union’s anti-subsidy probes and tariffs on Chinese EVs follow similar logic. These measures are often framed as industrial self-defense rather than geopolitical alignment, but Chinese firms nonetheless bear the heaviest burden.

Layered onto this regulatory tightening is a broader geopolitical narrative that Chinese firms cannot fully escape. As strategic competition between China and the West deepens, corporate decisions are frequently interpreted through a political lens. DJI, the world’s largest drone maker, has had its products restricted by US agencies over unproven cybersecurity concerns. Telecoms contracts in Malaysia or the Philippines have become bargaining chips in geopolitical negotiations. Chinese mining projects in Africa face scepticism from local communities regardless of corporate behaviour. As one senior ByteDance executive in Singapore has shared, a question they hear from prospective enterprise clients in Southeast Asia again and again is: “Where are your servers located?”

Part of the challenge is perception: in many international capitals, foreign policymakers struggle to distinguish between “a Chinese company” and “the Chinese state.” Even private firms emphasising their autonomy can be viewed as potential extensions of Beijing’s strategic ambitions. This blurring, part structural and part political, creates a trust deficit that Chinese companies cannot solve with engineering prowess or competitive pricing alone. Instead, they must learn to operate in an environment where regulatory scrutiny, political sensitivity, and narrative risk are inseparable features of global competition.

Global expansion outpacing global readiness

Taken together, these obstacles explain why China’s globalisation story is more complex than headlines suggest. Chinese firms have extraordinary strengths: engineering and digital prowess, cost efficiency, manufacturing scale, and the confidence to compete anywhere. But global expansion requires a different set of capabilities, ones that take years, even decades, to develop.

What Chinese companies need now is less about factories, technologies, and products, but more about trust.

• Trust from consumers, built through brands and service
• Trust from regulators, built through transparency and compliance
• Trust from employees, strengthened through local empowerment and talent development.
• Trust from communities, fostered through engagement and responsibility

Firms such as Lenovo, BYD, and ByteDance demonstrate that success is possible. They have invested in local management, built credible brands, strengthened governance systems, engaged with local regulators, and treated global markets not as extensions of China but as independent, essential markets in which they are prepared to engage and grow productively.

The capabilities required for successful overseas expansion

Despite these challenges, I am convinced that Chinese companies can develop a new set of capabilities. The framework that follows lays out what capabilities these firms must actually develop and put into practice—moving beyond slogans to the real organisational capabilities required for global competitiveness.

Fixing misreadings of consumers and culture

The first and perhaps most fundamental challenge is the tendency to misread foreign consumers and cultures. At home, Chinese firms operate in a vast, hyper-competitive market where product cycles are short, ecosystems are tightly integrated, and price–performance trade-offs dominate decision-making. It is tempting to assume that the same formula will work everywhere. It does not.

Overseas, Chinese firms are no longer national champions or anonymous value-OEMs working quietly in the background. They are frontline brands, directly exposed to consumer and regulatory judgment. That changes the game. Instead of thinking campaign by campaign, firms need to think in terms of five- to ten-year horizons: what does the brand stand for in Europe, Southeast Asia, or Latin America? Safety and reliability? Green innovation? Design and comfort? Once that identity is defined, it must be consistently reinforced, even when quarterly sales tempt Chinese managers to chase short-term wins.

Trust abroad is built less through slogans and more through evidence. That means publishing quality and safety data in local languages, making warranty terms generous and straightforward, and backing products with visible networks of service centres and spare parts. In automobiles and appliances, after-sales support and resale value matter at least as much as initial price. Chinese EV makers, for example, will only achieve durable success if they can work with local dealers, financiers, and insurers to stabilise second-hand values rather than accepting heavy discounts as inevitable.

Misreading culture cannot be fixed by appointing a token local country head. It requires a systematic approach to cultural intelligence. Chinese managers sent to Europe, Latin America, or Africa need structured training on labour norms, communication styles, and regulatory culture—real case-based learning, not one-off seminars. The question is not whether Chinese headquarters “trust” local teams in the abstract, but whether those teams have genuine decision-making authority over products, pricing, hiring, and partnerships, the same issues that plague MNCs competing in China today.

Where firms have moved from the traditional model of “Chinese boss, local staff” to genuinely mixed leadership teams, the results have been striking. Haier’s success in the United States came when local managers were given real autonomy to run their own P&L, tune product portfolios to local tastes, and shape channel strategy. By contrast, subsidiaries whose every move must be cleared with Shenzhen or Shanghai headquarters remain slow, unresponsive to local signals, and ultimately irrelevant, when more established international or local brands are readily available.

Trust is also built through embeddedness. Too many Chinese firms enter new markets with their own engineers, suppliers, and construction crews, only to wonder why skepticism festers. In most countries, foreign companies earn legitimacy not by announcing their presence, but by weaving themselves into local ecosystems, partnering with distributors, working with local research institutes, participating in industry associations, and engaging with communities. In infrastructure, mining, logistics, and manufacturing, that means committing to local hiring and supplier development, consulting communities early and regularly, and treating stakeholder engagement as a core workstream, not as window dressing.

The goal is simple to articulate, yet difficult to fake: local dealers, suppliers, regulators, and communities should genuinely feel that this is not just a Chinese company operating in their market, but in some meaningful sense, a company that is also theirs.

Escaping the competitiveness and market-structure trap

Chinese firms often enter foreign markets dominated by entrenched incumbents, such as Japanese automakers in Latin America, Korean electronics in Southeast Asia, and European industrial champions at home. Combined with China’s overcapacity and aggressive pricing strategy, this frequently triggers anti-dumping investigations and political backlash, and reinforces the stereotype that Chinese players can only win by undercutting competition.

The only durable escape is to shift from cost-led competition to innovation-led differentiation. That requires building global R&D and design centres near key customers, not just in Beijing, Shenzhen, or Shanghai. Medical-device maker Mindray has shown that global success comes when products reflect the workflows, safety standards, and regulatory expectations of advanced markets, not just those of Chinese hospitals.

The same principle applies across sectors. EV makers must design not only vehicles but entire user journeys— from charging networks to financing options, apps, and after-sales experience. Electronics firms must care as much about software experience and data privacy as they do about hardware.

Innovation also needs protection. Filing patents in China is no longer enough. Chinese firms seeking a long-term presence in Europe or the US must build intellectual-property portfolios that are recognised in those jurisdictions, participate in standard-setting processes, and think more strategically about licensing. The logic of competition must shift from “cheaper and faster” to “better, safer, and more suited to local needs.”

At the same time, over-reliance on China-based production leaves firms vulnerable to tariffs, sanctions, and sudden export controls. Leading Chinese companies are therefore moving toward “China+1” and multi-hub supply-chain models. BYD, CATL, and Chery are all investing in factories in Southeast Asia, Europe, and the Americas. Even partial localisation, final assembly, critical components, or specific models, can substantially reduce tariff and political risk while strengthening local credibility.

Resilience requires more than new plants. It means developing alternative suppliers for critical parts across at least two regions; running regular “what if” simulations on tariffs, export controls, and logistics disruptions; and pre-agreeing on contingency plans rather than improvising in the midst of a crisis. Done well, supply-chain diversification turns geopolitical shocks from existential threats into manageable business risks.

Addressing organisational growing pains

Many Chinese firms are superb engineering machines but immature global organisations. They can ramp up factories quickly, squeeze costs, and hit volume targets. But global success depends increasingly on governance, compliance, ESG, and talent systems, areas where Chinese firms are still learning.

The experience of company’s like ZTE show why compliance can no longer be treated as a peripheral legal function. It must be a strategic capability. That starts with a global compliance architecture led by senior executives. A Chief Compliance or Risk Officer with real authority, reporting to the CEO and the board, sends a different signal than a junior lawyer buried in a regional office. To operate globally, firms need unified policies on sanctions, export controls, data, cybersecurity, and anti-bribery, even if on-the-ground execution varies by country. Strong internal audit mechanisms, whistleblower channels, and regular training are no longer “Western” luxuries; they are the basic price of participation in global markets.

ESG performance is similarly becoming a gating factor for access to foreign capital and contracts. Global investors and regulators increasingly assess firms on environmental footprints, labor and safety standards, and supply-chain transparency. For Chinese companies, this is both a vulnerability and a chance to reset the narrative. Firms that set group-wide baselines for emissions and safety, publish credible sustainability reports that meet international standards, subject themselves to third-party verification, and respond quickly and visibly to environmental or labor complaints can shift the story away from “China is flooding us with cheap goods” towards “China is building responsible global industries.”

Above all, underneath all this lies the issue of people. No amount of process design can substitute for capable, empowered, and engaged talent. Chinese firms that want to become true multinationals must build global talent pipelines in which local managers can realistically aspire to regional and global roles. Performance systems should reward teams that solve cross-border problems rather than those that only optimise results in China. Internally, cultures need to balance China’s strengths, speed, execution, and toughness, with psychological safety, honest feedback, and respect for local expertise.

An organisation that cannot attract and retain good local people will remain, at best, a multinational exporter. It will not become a multinational company.

Managing regulation, politics, and the geopolitical narrative

Even privately owned Chinese firms find themselves being viewed as potential extensions of Beijing’s strategic ambitions. Chinese executives may resent this, but they cannot wish it away. The only viable response is for firms to develop regulatory diplomacy and narrative-building capabilities that are as professional as their engineering and manufacturing.

Regulators expect ongoing, structured engagement. That means building government-relations teams in key capitals staffed not just with salespeople or retired officials, but with professionals who understand both Chinese interests and local political dynamics. It means mapping out all the relevant stakeholders, ministries, agencies, unions, NGOs, and industry associations, and engaging them routinely, not only when a crisis erupts. It also means behaving in ways that are predictable and transparent: avoiding sudden plant closures, abrupt pricing moves, or large-scale layoffs without advance consultation. Policymakers do not have to like a company to accept it; they do, however, need to know they can talk to it.

Narrative matters too. Chinese companies cannot change the broader geopolitical climate, but they can be more transparent about who they are and what they stand for. Articulating ownership and governance structures, explaining how commercial decisions are insulated from political instructions, and being open about data practices and cybersecurity safeguards are now basic requirements. Tracking and publicising local contributions, jobs created, taxes paid, skills transferred, green capacity installed, can help anchor a company in the eyes of local stakeholders. Aligning corporate messaging with China’s stated principles of peaceful development and multilateralism can give host countries a framework for cooperation rather than confrontation.

If Chinese firms do not tell their story, others will gladly do it for them, and not in the ways they would desire.

Conclusion: The coming global capabilities race

China’s firms are already global in scale. The real question is whether they can become global in mindset, governance, and behaviour.

The capabilities outlined here are not abstract ideals; they are direct responses to the four core challenges. Western, Japanese, and Korean multinationals took decades to develop similar capabilities. Chinese companies will need to compress that learning into a much shorter period, under far more intense geopolitical scrutiny.

The next generation of leading Chinese multinationals will be those that understand foreign consumers as deeply as they understand Chinese ones; that compete on innovation, quality, reliability, and trust rather than price and speed alone; that operate with governance and compliance strong enough to withstand the toughest regulatory examination; and that engage regulators, communities, and partners with confidence and transparency.

Chinese firms have already shown the world that they can build products fast and cheaply. The next test is showing that they can also build reliability and trust.

Daniel Chng is Professor of Strategy and Entrepreneurship at CEIBS. His research interests focuses on organisational and managerial strategic behaviours during situations adversity.