Chinese firms’ overseas expansion drive opens up opportunities for Citigroup
- The US bank has been fielding inquiries from Chinese companies on setting up operations in the Middle East, Africa and Asean, executive says
Chinese companies are in a rush to go global amid a competitive domestic landscape and overall slower consumption at home.
Even with many cultural hurdles to overcome, a global expansion presents lucrative opportunities for medium to large Chinese companies, both in terms of making profits and diversifying risks, creating business opportunities for lenders such as Citigroup, according to a top executive.
“Chinese companies are especially looking at emerging markets like the Middle East, Asean and Africa,” said Lin Hai, head of Citi Commercial Bank (CCB) for China. “But some of the biggest challenges they face include lack of local know-how.”
China’s retail sales, a gauge of consumption, rose 2 per cent in June, slowing significantly from a 3.7 per cent increase in May, proving further impetus for the overseas drive.
Some Chinese brands are turning to Asian countries where their products – like bubble tea, for example – are more familiar to consumers. Others that are less culturally specific, such as car makers, are looking to the West where their products can fetch higher prices than in China.