Goldman Sachs: The overseas expansion of Chinese companies will move from the periphery to the core, and the overseas market share is expected to rise to 31% in 2035

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Chinese companies account for nearly 40% of the global market. This is probably not surprising after ten years of domestic substitution. The share in markets other than China has risen sharply to 18%, and competition is advancing from the periphery to the core market segment of the world's leading existing companies.

The largest share growth of Chinese companies came from emerging markets rather than the US and China markets, which are seen as the most competitive. China's industrial products may be more disruptive, but consumer products (B2C) have the highest adoption rate. Although Chinese exports are seen as driving substantial deflation and usually enter the market at an average discount of 30%, prices in 7 out of 11 industries subsequently rose after entry. Prices tend to stabilize or rise when market demand and revenue expand, and only fall when revenue pressure is triggered. The capital market will mercilessly punish loss of share, but the loss of market value of existing companies is not always reflected in the profits of Chinese companies.

By 2035, the market share of Chinese companies will rise further to 31%, and revenue will increase 3.6 times, benefiting the “latecomers.” Goldman Sachs believes the road will be more difficult and the pace will be slower because the competitive field is shifting to core segments, and the moat for existing companies is the widest there. A competitive response is critical — if an existing company relinquishes peripheral markets or low-margin products, it may provide a beachfront position for new Chinese entrants to enter the high-end market. The next round of price compression is most likely to be catalyzed by low demand, and Goldman Sachs believes RVC and cars face the most immediate risk. Finally, the market has yet to take into account China's global growth opportunities, and the market sales rate of some industries other than China is less than 1 times.