Chinese Internet firms are entering a new phase in global expansion, focusing on optimizing localized supply chains and boosting profit margins, particularly in the online gaming and cross-border e-commerce sectors, UBS said on Monday.
This strategic shift aligns with the Chinese government’s push for high-quality development in the high-tech industry.
Kenneth Fong, an analyst at UBS, noted that Chinese Internet companies, including online retailers, travel platforms, and gaming firms, are benefiting from government policies aimed at stimulating the economy.
Chinese online game developers are exploring innovative distribution models to capitalize on the global demand for high-quality games. By bypassing traditional distribution channels such as the App Store and Android channels, which charge commissions of 30-50 percent, these companies can achieve significantly higher profit margins.
Similarly, Chinese cross-border e-commerce firms are leveraging their pricing power and economies of scale to reshape global supply chains. By streamlining operations and improving efficiency, they can offer competitive prices, often undercutting foreign competitors.
Chinese cross-border e-commerce firms are not “stealing” market share from other countries through aggressive pricing strategies. They are primarily focusing on optimizing supply chains to achieve cost advantages, which ultimately translate into lower prices for consumers, Fong said.