Consumer Goods Going Global in 2025: Strategies and Trends

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Overview of the Consumer Industry Going Global

China's outbound direct investment (ODI) has continued to grow steadily. In 2024, the total ODI for all industries reached USD 162.78 billion, with non-financial direct investment accounting for USD 143.85 billion. Current outward investments are primarily driven by brands and technology, leading to more greenfield investments. Emerging markets such as ASEAN, Latin America, and the Middle East are particularly favored.

In recent years, overseas mergers and acquisitions by Chinese consumer goods companies have generally shown a downward trend, especially with a significant reduction in large-scale transactions. However, the number of deals has remained relatively active. In 2024, the value of overseas M&A in the consumer industry was only USD 1.6 billion, a decrease of 52% year-on-year, hitting a five-year low. The number of deals was 48, down 11% year-on-year. Despite the overall decline, mergers and acquisitions in countries such as Japan, Germany, and New Zealand have seen increases in both value and number.

Overall, China's consumer goods trade has maintained stable development. In China's consumer goods trade, exports dominate, with their value being approximately four times that of imports. In 2024, despite a challenging global economic environment, China's consumer goods exports remained resilient, achieving a 1% growth to reach approximately USD 1.2 trillion.

The Evolution and Hotspots in Consumer Industry Globalization

The internationalization process of Chinese enterprises can be broadly divided into three main stages: product export (Stage 1.0), multinational operation (Stage 2.0), and global operation (Stage 3.0). The external environment and relevant considerations for enterprises have changed significantly during these stages.

Product Export Stage (Stage 1.0)

In the initial stage of internationalization, Chinese companies primarily enter overseas markets through product sales. The characteristic of this stage is that, apart from export-oriented consumer goods companies, overseas market coverage is relatively low. The contribution of overseas business is generally below 20%, mainly focused on consumer countries or regions downstream in the supply chain.

Multinational Operation Stage (Stage 2.0)

As companies adapt to overseas markets, they gradually enter the multinational development stage. The core feature of this stage is a significant increase in the proportion of overseas revenue. Companies begin to establish overseas subsidiaries to better manage their overseas business.

Global Operation Stage (Stage 3.0)

In the advanced stage of internationalization, companies achieve global operation, with the proportion of overseas revenue reaching a certain scale, even surpassing the domestic market. Companies at this stage have strong industry influence and brand recognition in major global markets.

Cross-Border E-Commerce Exports

As a new form of trade driven by technological innovation, actively applying new technologies, adapting to new trends, and cultivating new动能, cross-border e-commerce has become a vital force in China's foreign trade development and an important trend in international trade.

In recent years, China's cross-border e-commerce has maintained a vigorous development trend. In 2024, China's cross-border e-commerce imports and exports reached RMB 2.63 trillion, a year-on-year increase of 10.8%, accounting for 6% of the total import and export value. Exports dominate cross-border e-commerce imports and exports, accounting for nearly 80% in the first half of 2024 and the first three quarters of 2024.

Common Business Models and Their Pros and Cons

  1. Direct Mail Model: Mainly includes postal networks, express delivery, and dedicated lines. The direct mail model has distinct differences in traceability, timeliness, billing methods, and product prices.
  2. Overseas Warehouse Model: Cross-border e-commerce sellers stock goods in overseas warehouses, which are then shipped. It performs well in price, timeliness, and loss rate.

Key Considerations for E-Commerce Taxation

From a corporate perspective, due to the particularity of the cross-border e-commerce industry, tax-related matters are quite different from those in traditional industries. Moreover, they often involve multiple national tax types, making tax compliance an important challenge that cross-border e-commerce companies cannot avoid and urgently need to solve.

Common Tax Risks in Mainland China and Hong Kong

Common Tax Risks in the United States

Common Tax Considerations in the European Union

Optimizing Cash Flow for Cross-Border E-Commerce: Advance Export Tax Rebates

On January 27, 2025, the State Taxation Administration issued Announcement No. 3 of 2025, deciding to implement an export tax rebate policy for goods exported through cross-border e-commerce overseas warehouses, termed "advance export tax rebates." This policy significantly shortens the tax rebate cycle and optimizes cash flow.

The Impact of U.S. Tariffs on Export E-Commerce

At the beginning of his new term, U.S. President Trump reintroduced "tariff cards," first targeting Canada, Mexico, and China. The intention is to strengthen trade protectionism through high tariffs, reduce the trade deficit, attract industries to relocate, revitalize U.S. manufacturing, enhance U.S. competitiveness, and maintain the dominant position of the U.S. economy.

The proposal to cancel the tariff exemption for goods valued below USD 800 will inevitably weaken the price advantage of the vast majority of Chinese cross-border e-commerce sellers who only have small package goods. Independent stations and self-delivery will also face a significant risk of customer loss.

Future Opportunities and Challenges for Cross-Border E-Commerce

Currently, cross-border exports exhibit many new characteristics, bringing new challenges and opportunities for cross-border logistics. In terms of opportunities, we believe there are four major ones:

  1. Strengthen the layout of overseas warehouses, focus on optimizing site selection, increase the number of overseas warehouses, and achieve cost economies of scale.
  2. Improving operational efficiency and digital transformation is imminent.
  3. Chinese cross-border logistics companies should meet customized needs.
  4. Destination mergers and acquisitions and supply chain integration.

In terms of challenges, we face four major ones:

  1. Global supply chain disruptions and soaring logistics costs.
  2. Heterogeneous construction of industrial informatization within the industry.
  3. The cross-border e-commerce logistics industry faces a relevant talent gap.
  4. The cross-border e-commerce logistics industry faces a more intense competitive landscape.

The Art of Site Selection for Advanced Globalization Stages

In the 2.0 and 3.0 stages of going global, the supply chain出海 of consumer goods companies has become an important strategic initiative for expanding international markets and enhancing competitiveness. In the current economic situation of deglobalization accompanied by increasingly severe protectionism, site selection has become a key strategic move.

Difficulties in the Site Selection Process for Chinese Enterprises

Enterprises often encounter many difficulties during the overseas site selection process, such as:

Introduction to EY's Site Selection Methodology

The core of the site selection method is to be objective and data-oriented. Site selection analysis should start with determining the project's needs. A comprehensive site selection evaluation includes analysis of factors such as the local labor market, infrastructure, convenience, and potential economic incentives.

Frequently Asked Questions

What are the main drivers of China's outbound direct investment in the consumer sector?
The current outward investments are primarily driven by brands and technology, leading to more greenfield investments. Emerging markets such as ASEAN, Latin America, and the Middle East are particularly favored due to their growth potential and market opportunities.

What are the key differences between the stages of internationalization for Chinese consumer companies?
The internationalization process is divided into three stages: Product Export (1.0) focuses on basic export sales; Multinational Operation (2.0) involves establishing overseas subsidiaries and increasing revenue share; Global Operation (3.0) achieves full global integration, with overseas revenue often surpassing domestic income and a mature global value chain.

How is cross-border e-commerce shaping China's export strategy?
Cross-border e-commerce has become a vital force in China's foreign trade development, accounting for a significant portion of total exports. It allows businesses to reach global consumers directly, driven by digital platforms and efficient logistics like overseas warehouses, which help in reducing costs and delivery times.

What are the common tax risks for Chinese e-commerce businesses operating overseas?
Common risks include transfer pricing issues, permanent establishment concerns, personal income tax compliance for overseas employees, and challenges in applying for relevant tax incentives. Different regions like the US and EU have specific VAT, sales tax, and tariff regulations that must be carefully managed.

What is the impact of recent U.S. tariff policies on Chinese exports?
Recent U.S. tariff increases have raised the cost of Chinese goods entering the American market, potentially affecting their competitiveness. The removal of the de minimis exemption for low-value packages is particularly impactful for cross-border e-commerce sellers who relied on this for small, direct-to-consumer shipments.

Why is site selection important for Chinese companies expanding globally?
Strategic site selection is crucial for managing costs, accessing talent, ensuring regulatory compliance, and optimizing supply chains. It involves evaluating factors like labor markets, infrastructure, tax incentives, and political stability to support long-term operational success and profitability in new markets. 👉 Explore more strategies for global expansion