If we focus on the international expansion of Japanese companies, then Chinese companies still have significant potential in the global market. HSBC analysts think so. They found that for companies listed in mainland China, known as A shares, only 11.7% of their total revenue last year came from outside the country. That share was even lower, at 10.3%, when looking only at the largest companies tracked by the CSI 300. By contrast, 35.3% of the revenue of companies in Japan’s Nikkei 225 index came from abroad last year, Stephen Sun reported , head of research at HSBC Qianhai Securities, and his team in a report published this month. Since the pandemic, Chinese companies have increasingly sought to expand overseas due to slowing growth at home. Electric vehicles and consumer products stand out to investment analysts for their international potential. “We believe the structural growth opportunities associated with the global expansion of consumer companies continue to be undervalued by investors, particularly in emerging markets,” UBS Asia-Pacific analyst Christine Pan and her team said in a June 12 report on consumer sector of China. Companies to watch. One of their buy-rated companies is Gongniu, a Shanghai-listed company that sells electrical products such as wall sockets, switches and lighting. In its annual report, the company said it opened subsidiaries in Germany and Indonesia last year and hired distributors in the Middle East and South America. Gongniu’s operating revenue overseas is only 2% or less of what it earns domestically. The company did not report overseas revenue for the first quarter, but said total revenue rose 14% year-on-year to 3.8 billion yuan. Compared with Japanese companies, the share of foreign income in the total income of Chinese businesses is small in all industries. “Although some leading companies such as BYD and CATL have taken concrete steps to gain global market share, with overseas revenue contribution reaching around 30%, we believe this is likely to signal a good start rather than ceiling,” HSBC analysts said, noting the company’s Japanese peers had increased overseas revenue to more than 70% of their business. HSBC analysis showed that the gap remains wide when looking at other industries such as electrical equipment (20.4% vs 53.8%), engineering (21.6% vs 53.5%) and pharmaceuticals (9.9% vs 34.6%). Here are the Chinese company’s “going global” stocks, all rated “buy” in each of the three categories: Anker is a Shenzhen-listed seller of batteries and chargers whose sales on Amazon in the US are up 65% year over year. – in April on an annualized basis. “Anker is also the only Apple-certified domestic third-party smartphone peripheral supplier and its leadership includes Google veterans with experience building overseas sales channels,” HSBC said in a report. Zhejiang Dingli is a Shanghai-listed manufacturer of ski lifts and other lifts. “We believe Zhejiang Dingli will benefit from strong growth in lift sales, particularly in the US market,” HSBC said in a report. He added that a “positive outcome” from the US Commerce Department’s May 1 review of anti-dumping duties could support Dingli’s gross margins. The latest review found that Dingli was selling its products in the US at a lower discount than previously reported, allowing the company to benefit from a separate tariff rate than its competitors. Snibe is a Shenzhen-based company, Shenzhen New Industries Biomedical Engineering, or Snibe for short, which sells clinical laboratory instruments and pharmaceutical testing substances. “Our healthcare analyst favors Snibe based on overseas sales momentum and forecasts overseas revenue CAGR of 29% from 2023 to 2026, driven primarily by reagent sales and increased mid-to-large device installations ” – HSBC “Potential hit from tariffs, report says Of course, new US and EU tariffs add uncertainty to how much Chinese companies will be able to benefit from overseas markets. “The conversation in the US has moved beyond being tough on China or worsening the situation in USA. -Relations with China. I think the conversation has now shifted more towards toughness on global trade or free trade,” said David Chao, global market strategist for Asia Pacific (ex-Japan) at Invesco, during a webinar on Thursday. “Trade between the U.S. and Japan Asia may be the good old days, but that doesn’t mean trade is going away,” he said, noting, for example, “we’re starting to see new trade routes between China and the Middle East.” Southeast Asian countries, which include Singapore and Indonesia, have overtaken the European Union over the past few years to become China’s largest trading partner by region. The US remains China’s largest trading partner individually. HSBC analysts also note that China is still there. Opportunities for increased direct investment abroad – Current levels relative to GDP are similar to those of Japan in 2012 and Germany in 1992, report says Investment in local factories and subsidiaries could help boost employment in other countries, CNBC’s Michael. Bloom contributed to this report.
