Internationalization of China's private economy enters a "new era of navigation"

Editor's note: Tang Jie is a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Chinese Ministry of Commerce. The article reflects the author's opinions and not necessarily the views of CGTN.

With their flexibility and innovation, Chinese private enterprises have become an important force in promoting the globalization of China's economy. Their process of expansion from local to global reflects the characteristics of the era of the deep integration of the country's economic transformation and globalization. 

At a time when the tide of anti-globalization and technological revolution is intertwined, private enterprises are facing competitive pressure from traditional multinational companies and new challenges brought about by geopolitical reconstruction. They are not only the pioneers of global layout, but also the promoters of technological innovation, industrial chain integration and international cooperation. They have injected new momentum into the global economy and demonstrated the vitality and resilience of the Chinese economy.

The primary strength of private enterprises is the basic productivity obtained through cultivation of the local market, including unique products, technologies and business models, as well as valuable practices and lessons learned in China—known as a super economy and the largest market. 

Considering the uncertainty of the current global economic environment, private enterprises need to respond more flexibly. It is crucial for them to formulate clear internationalization strategies, carry out cross-border cooperation and adopt some outward-looking economic strategies. These strategies may involve choice of export models, establishing overseas bases or using cross-border e-commerce to expand their business territory, etc. Because, in some sense, the "micro-multinational corporations" phenomenon spawned by cross-border e-commerce platforms is rewriting the rules of globalization.

Advantages of industrial clusters are expanding

The Yangtze River Delta and Pearl River Delta industrial clusters provide unique advantages for globalization of some private enterprises in the zone. 

Taking Ningbo's injection mold companies as an example, the mold development cycle has been shortened through collaborative innovation in the industrial chain, and this efficiency advantage has been transformed into global competitiveness. 

The Wenzhou low-voltage electrical appliance industrial cluster has built a distribution network covering more than 100 countries around the world through "ant army"-style collaboration, demonstrating an innovative model for small and medium-sized enterprises to jointly expand overseas.

Paradigm breakthrough in the path of globalization

In the emerging industry, the development of the "reverse innovation" strategy is particularly significant. 

BYD's electric buses launched in the Norwegian market are equipped with polar cold-proof systems. This technological innovation for the Nordic market could feed back to the domestic market in the northeastern regions at the same time, forming a virtuous cycle of technological iteration. The intelligent irrigation algorithm accumulated by DJI agricultural drones in rice planting scenes in Southeast Asia has been eventually upgraded to a global precision agriculture solution. Some 3C electronic companies in Shenzhen have realized a 72-hour global response system from product design to overseas warehouse delivery through platforms such as Amazon and Temu.

Cognitive Leap of Transnational Governance

Compliance management is transforming from key components of cost to a type of competitive advantage. 

A photovoltaic company has established a dual-circulation data center in the EU to isolate compliance data between its R&D center in China and its factory in Poland. This forward-looking layout enabled it to complete the supply chain reconstruction before the implementation of the carbon tariff policy. 

WuXi Biologics has established a global quality traceability blockchain platform to transform drug production compliance records into trust certificates for opening up markets in developed countries.

The globalization process of Chinese private enterprises is essentially a creative combination of the market-oriented capabilities accumulated through reform and opening up with the new production factors of the digital age. 

When FUYAO Glass achieved the integrated innovation of "machine vision + six sigma management" in its Dayton plant in the United States, and when NIO established a user community-driven R&D center in Berlin, these practices have redefined the global value of "Made in China". When we discuss key factors for long-term growth, such as technological innovation, brand building, and localized operations, we may also need to mention government policy support, such as the Belt and Road Initiative. 

Future global competition will be not only about the output of products and capital but also about the global reconstruction of business paradigms and innovation ecosystems. In this process, grasping the balance between technological sovereignty and open cooperation and building cross-cultural organizational capabilities will become the key to private enterprises achieving sustainable global growth.