Bank analysts forecast China's overseas revenues for lifestyle brands to increase at a compound annual growth rate of at least 20 percent through 2030, while international demand for cloud-based service providers is expected to scale at an even faster 55 percent.
China’s lifestyle brands set to double their overseas business by 2030
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Centuries before “Chinamaxxing” trended on social media, there was Chinoiserie. The global fascination with everything Chinese dates back to the Silk Road of the Tang Dynasty, later accelerating during the Ming Period when Portuguese carracks established maritime trading routes from Macao in the 16th century.
Fast forward to today, the foreign appetite for Chinese goods and services remains highly visible. Amid intensifying domestic competition and tapering consumption back home, overseas customers are again emerging as an important growth driver for Chinese companies, a shift analysts believe could unlock new valuation multiples for major stocks trading on the Hong Kong stock exchange.
[See more: Beyond the hashtag: Decoding Chinamaxxing’s enduring impact on China’s global influence]
For several Chinese brands, proportional global exposure to total revenues is still relatively modest, write Lei Yang and Charlotte Zhou of brokerage firm CGS International. As a percentage of topline figures, the investment bank estimates that international sales hovers in the low-teen range for internet platforms and low-single digit territory for ready-to-drink (RTD) beverages and fashion retailers, exemplifying the industry’s nascent footprint.
Yet, as demonstrated by the rising popularity of Pop Mart’s monster-themed Labubu dolls or increasingly price-competitive AI tokens, this appeal underscores a competitive potential to export cultural lifestyles and digital services abroad.
For business-to-consumer (B2C) categories like leisurewear, toys, and RTD beverages, Yang and Zhou forecast overseas revenues to increase at a compound annual growth rate (CAGR) of at least 20 percent through 2030, effectively doubling their current revenue base, driven in part by improving customer perceptions and channel expansion.
In the business-to-business (B2B) space, overseas demand for Chinese digital cloud-based service providers is projected to scale at an even faster CAGR of 55 percent through 2030, led by stronger subscription revenues from US and European clients, the analysts predict.
However, while Chinese firms derive nearly a fifth of their sales from overseas customers, those currently account for just three percent of total market turnover due to lower average-revenue-per-user (ARPU) metrics. Earlier this year, China’s open-source large models drove 46 percent of global downloads but captured just 16 percent of total market revenues, according to the AI data developer platform Hugging Face.
Investment implications
Underpinned by a 30 percent CAGR for the AI industry, CGS expects China’s market share to expand three percentage points to 19 percent as Chinese software developers narrow the technological gap against Western rivals.
And with the AI market set to reach US$2.8 trillion by 2030, analysts have identified China’s deepening penetration as a critical re-rating catalyst for their stock prices, benefiting technology and communications conglomerates like Alibaba, Tencent, and China Mobile, which account for almost a fifth of the Hang Seng Index, Hong Kong’s main investment benchmark.
Unlocking new market valuations would bode well for the financial hub. The city recently lost its IPO crown following SpaceX’s $75 billion debut on the Nasdaq in New York, while the Hang Seng has lost nearly a tenth of its value after returning 30 percent last year.
However, historical precedents serve as a cautionary tale. The modern Chinamaxxing phenomenon shares overlapping parallels with the 16th-century craze for Chinoiserie, warns Annabel Jackson, noted academic and author of The Making of Macau’s Fusion Cuisine, in conversation with The Bay.
Just like the porcelain fervour of the Chinoiserie era, the market was driven by proprietary technological know-how. Mastering specialised clay mixtures and kiln temperatures once represented the pinnacle of advanced engineering and industry control, she explains. But because everyone sought to manufacture their own porcelain, excessive supply lowered prices, foreshadowing the negative consequences that few industries are immune to.
Looking ahead at the upcoming earnings season, fund managers will closely monitor corporate results for signs whether China’s leading AI platforms are successfully monetising their international operations, particularly in the B2B space, CGS says.
The analysts argue that to support the optimism, Chinese digital service providers must demonstrate they are not just generating new revenue streams from foreign clients, but are also servicing Chinese companies expanding into those countries. For the meantime investors are hoping these groups can learn from the history of Chinoiserie, rather than repeating its downfall.
