What one talks about when one talks about chuhai | Following the Yuan
What one talks about when one talks about chuhai
Chuhai, a colloquial term for Chinese enterprises going overseas, does not only denote a business activity. It carries avowals of adventure and heroism.
When Chinese companies explain their plans for chuhai, many refer to Zheng He’s Voyages to the Western Oceans (郑和下西洋), a series of maritime expeditions during the Ming dynasty in early 15th century. They envision themselves as the admiral who leads a colossal fleet to unknown lands.
You may be familiar with the narrative behind Chinese companies’ chuhai trend, where the economic slowdown, overcapacity and saturated domestic market drove an increasing number of Chinese players overseas. While there’s an overlap between export and chuhai, the latter is much more complex, involving not just sales but also investment, manufacturing, branding and marketing.
Modern China’s chuhai steps begin in the ‘reform and opening up’ era, and each phase has its particular traits.
Early on, only deep-pocketed consumer electronics companies such as Hai’er, Huawei, BYD, Gree marched abroad. Around the mid-2010s, droves of gaming companies and tech platforms went global. Today, it’s the consumer brands that are taking over the center stage.
Chuhai is also a term of relativity.
When multinationals entered China in large numbers in the 1990s and early 2000s, it was their version of chuhai.
However, they started on an uneven playing field as the beneficiaries of foreign brand halo effect, whereas Chinese brands must contend with enduring stereotype of being cheap and low quality — a perception often reinforced by governments for national security or economic protectionism.
In 2025, Chinese brands already have an easier time as people’s attitudes toward China become less unfavorable. After TikTok ‘refugees’ flooding to RedNote, IShowSpeed’s China tour, the meteoric rise of Labubu, China’s increased soft power is giving these companies a boost they didn’t know they can rely on.
‘The West’ as the ultimate test for consumer goods
In early 2023, we started seeing a plethora of Chinese consumer companies expanding to Southeast Asia.
Back then, Luckin famously used Singapore as a hub for the region. Other peers including Mixue Ice Cream & Tea, Chagee and Nayuki Holdings followed suit. In tea and beverage alone, over 44 Chinese brands have opened 15,000 overseas stores by this June, according to trade publication Tea and Coffee Watcher.
They aren’t the first crops of Chinese companies selling abroad, but they are indeed the most high-profile compared to their predecessors.
Their predecessors preferred to stay low-key — think Anker innovations, which the majority of the U.S. didn’t know was a Chinese company, including Trump himself when he used its power bank last August — some for branding reasons and some for business reasons.
“Internet companies that are going global should play low-key,” Zhou Hongyi, a billionaire entrepreneur, recommended to young contestants at the first chuhai industry summit of Shark Tank-like ‘Finding China’s Entrepreneurs’ in 2017. “Discover a blue sea market overseas, say less and do more. Don’t disturb the giants.”
But this generation of Chinese consumer brands, just like the younger generation itself, are more culturally confident. They don’t see the need to tiptoe like their predecessors.
The domestic market as training ground
For that, they owe much to the domestic consumer market and Chinese consumers.
After China’s inclusion into the WTO, the flood of FDI and multinational companies equip the local market with awareness and know-how of branding and marketing.
By the 2010s, where China’s hot VC money era tracks with the consumption upgrade phase. There were upgrades in the backend to improve manufacturing efficiency, as well as in the front to improve branding, marketing and packaging.
This gave local talent the best opportunities to create brands for the home market.
A consumer brand created during this phase (2013-2018) typically extends the ambition of its investors: it would do anything for market share. Hence wars of scale in ride-hailing, social e-commerce, grocery apps, with the same playbook applying to consumer goods.
When that mentality intersects with China’s highly digitalized and mobile-driven environment, you get an ultra-fast-changing market driven by novelty and online traffic. It wears businesses out.
An overall pattern for Chinese companies is to start from their neighbors in Southeast Asia for cultural affinity, affordability and cachet as a Chinese brands. It’s typical for them to use a term from sci-fi writer Liu Cixin’s Three Body Problem — “attack by lowering the dimension of your target (降维打击)” — to describe the rationale of doing so, meaning the latter is simpler and less saturated.
Different from the 2015 wave of gaming and tech platforms, where they go straight to the US for economies of scale, capital and talent, the likes of Luckin and Mixue only entered the US after establishing themselves in SEA.
With risks in geopolitics, labor and ESG policies, as well as differences in marketing and work culture, the US has become the ultimate test and fortress to conquer.
It is exactly like what Frank Sinatra says: “If you can make it here, you can make it anywhere.”
‘Bad’ habits die hard
Typical things that Chinese brands do overseas, which are unconsciously shaped by the domestic playbook, include: little research, overly digital, over-controlling of marketing messages, and poor work culture. (Please note, this is a recognized pattern but does not apply to all Chinese companies.)
Little research:
(root cause) China’s media consumption habits where free information is the norm
(behavior) Consulting itself does not drive ROI so we should minimize it
Overly digital:
(root cause) China’s fast-growing social and e-commerce environment
(behavior) Overseas consumers will get there with live-streaming e-commerce, and when they do, we are ready
Over-controlling of marketing messages
(root cause) China’s top-down propaganda system
(behavior) every media and influencer should repeat our key messages word by word
poor work culture
(root cause) weak labor law enforcement in China on work hours, work conditions; non-existent work life balance
(behavior) Expect staff to prioritize work and employer over all other aspects in their lives
The media portrayal I’d like to see
I’ve commented on many Labubu and Luckin stories recently, and I want to make it clear about my own ‘agenda.’
I do not appreciate it when the FT column cites Luckin as “the Chinese chain was publicly disgraced for fabricating sales ahead of its Nasdaq debut” without clarifying that it changed owners. I would have added that the same disgraced former execs who were responsible the accounting scandal founded Cotti Coffee, now seen as Luckin’s challenger.
I do not appreciate it because this is perpetuating negative stereotypes of Chinese companies and the people behind it, which is reminiscent of Peter Thiel’s rhetoric that all Chinese companies are copycats. This also encourages an age-old PR tactic to change company names or even stock ticker names in the wake of scandal.
This is not to say that I’m finding everything the new owner, Centurium Capital, did after 2020 perfect. I do highly agree with the column that low-paying delivery workers play a major part in any of Luckin’s success.
Other than taking advantage of the underpaid delivery market, the corporate also watches staff with surveillance cameras, makes stores compete on a dashboard, re-creates the force-fed Chinese education system with so-called Luckin University, makes staff wash cleaning cloths with disinfectant every 30 minutes and wash hands every hour for 20 seconds so much so that staff grow chronic skin conditions — thankfully the last rule stopped in January 2024 when it got nationwide attention through Weibo.
Much of the practice is inhumane, but it’s considered standard in China. That makes Western companies that follow ‘non-Chinese’ rules slower, less competitive. However, from a capitalist perspective, Luckin is maximizing shareholder value.
Through Luckin’s example, I believe that it should be made clear that the cheaters left to found their new thing, which should be further scrutinized. And Luckin and others’ work culture within China should gain more attention worldwide.
I hope to see more conversations that could make China become less ‘involuted’, and make every regular Chinese person’s life better. Even that may just mean they touch disinfectant with their bare hands less, and that they don’t have to overwork for a basic livelihood. That’s my agenda.
I also think that’s what media attention is for. 🔚
Appendix [link in Chinese]:
1997 – Huawei entered Russia via joint venture Beto-Huawei to produce switches and equipment.
1998 – BYD set up a European subsidiary in the Netherlands, exporting phone batteries—its first overseas market.
1999 – Haier invested 30 million RMB to build a U.S. production center.
2001 – Gree’s first overseas base in Brazil began production with a $20 million investment.
2004 – TCL acquired Thomson’s TV business in France, forming TTE; Lenovo bought IBM’s personal computer division for $1.25B.
2005 – Tencent made its first overseas investment in Korea’s GoPets.
2006 – Transsion entered Africa with itel, focusing on 2nd/3rd-tier cities.
2009 – OPPO expanded abroad from Thailand, later into India, MENA, Europe, and Latin America.
2010 – Geely acquired Volvo Cars from Ford for $1.8B.
2012 – Haidilao opened its first overseas restaurant in Singapore; Shein launched cross-border fast fashion under “Sheinside.”
2013 – DJI entered the U.S. and captured 50% of the drone market within two years.
2014 – CATL set up its first overseas subsidiary in Germany; Xiaomi launched in India.
2015 – MiHoYo started directly operating the Japanese version of “Guns Girl - School DayZ.”
2017 – ByteDance launched TikTok and acquired Musical.ly for $1B, merging it into TikTok.
2018 – Mixue and Heytea opened their first overseas stores in Vietnam and Singapore, respectively.
2020 – Pop Mart opened in Seoul; Yutong Bus signed a deal with Qatar; XPeng delivered its first EVs in Norway.
2021 – NIO entered Norway as its first overseas market.
2022 – PDD launched Temu in the U.S.
2023 – Luckin opened its first overseas store in Singapore.