China's economy is struggling, but its homegrown companies are dominating abroad, Goldman Sachs says

"China's economy is still stuck in a yearslong slump marked by a property crisis, weak consumer demand, and deflation - but its biggest companies are raking in cash abroad, according to a new Goldman Sachs report. As the domestic market stagnates, Chinese firms are turning abroad for customers and finding fatter profits once they get there. Gone are the days when China was simply exporting more goods at rock-bottom prices. It's now exporting services, technology, intellectual property, and culture."

"It has also strategically increased its overseas direct investment in recent years, particularly to emerging markets and Belt and Road Initiative countries. "This strategy enables Chinese companies to diversify supply chains, build production capacity closer to end markets, and enhance business resilience," wrote analysts from Goldman Sachs in a note republished on Sunday. Chinese listed companies now earn about 16% of their total revenue overseas, up from 14% in 2018, per Goldman's analysis. That's well below the roughly 50% average for developed-market firms, but it's rising fast. The bank expects that share to keep climbing by about 0.6 percentage points a year."

China's domestic economy faces a prolonged slump characterized by a property crisis, weak consumer demand, and deflation. Major Chinese companies are expanding abroad to capture stronger profits and customers outside the stagnant home market. Exports are moving up the value chain to include services, technology, intellectual property, and culture, alongside traditional manufactured goods. Overseas direct investment has risen, especially toward emerging markets and Belt and Road Initiative countries, enabling supply-chain diversification and closer production to end markets. Listed Chinese firms now derive a growing share of revenue overseas, and that share is expected to continue rising annually.

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