Miniso opened its first flagship store in February 2022 in SoHo, New York City.
miniso
BEIJING – Some Chinese consumer brands are seeking growth overseas in markets such as the US and Southeast Asia.
Take miniso, a Guangdong-based seller of toys and household products. Sometimes called the Muji of China, Miniso opened a flagship store in Soho, New York City, in February.
The store’s gross merchandise value — a measure of sales over time — is about $500,000 a month, with the potential to hit $1 million a month by December, founder and CEO Jack Ye told CNBC in late June.
More importantly, he noted that for stores that operate directly in the United States, Miniso’s gross profit margin exceeds 50%.
According to the CNBC translation, Ye said in Mandarin, “If we can get a strong foothold here and build a good business, we won’t have a problem in America overall.” They aim to be the first “$10 and under” retailer worldwide.
Miniso stores started popping up in mainland China about 10 years ago, with overseas expansion beginning in 2015 in Singapore. As of March, the company said 37% of its 5,113 stores were overseas.
Rapid growth outside China
Like many businesses, Miniso saw sales decline during the pandemic. More than two-thirds of its revenue still comes from China. But over the past several months, data showed a relatively rapid pickup internationally versus domestically, a result of the varying impacts of the pandemic.
In the nine months ended March 31, the company said, its China revenue rose 11% year over year to 5.91 billion yuan, a 48% increase from overseas to 1.86 billion yuan.
China’s retail sales have declined since the pandemic began in 2020. The slowdown in the housing market hasn’t helped. Local people tend to save rather than spend or invest climbed to its highest level in 20 yearsAccording to a survey by the People’s Bank of China.
“Chinese companies expanding into overseas markets will be a major trend,” said Charlie Chen, head of consumer research at China Renaissance. “China has actually entered a relatively prosperous phase with a relatively high GDP per capita.”
He pointed out that for products such as air conditioners, penetration of rural households was 73.8% in 2020 – and over 149.6% in urban areas. China Renaissance expects those admissions rates to increase steadily over the next few years.
“There is very little incremental volume or incremental demand that can be created in China in a short period of time,” Chen said. “These air conditioners, for home appliance companies, where they can get more revenue, it’s overseas.”
In Southeast Asia, a home of air conditioners is Penetration rate of 15% according to the International Energy Agency.
home appliance companies media, Hisense And Haier Smart Home Over the past several years, markets outside China have been under pressure. Haier also acquired general electrics equipment unit for $5.4 billion in 2016, Hisense aims that by 2025, The overseas market will generate half of its total revenue.
Those companies are seeing stronger growth overseas, if not faster than in China.
“Certainly if [Chinese companies] Wants to enter foreign markets [they] You need to build your brand, fight existing competitors,” Chen said. “The cost won’t come down. Initially they will not be profitable. But they are investing.”
If Chinese businesses are able to build their brand overseas, they can compete with lower selling prices because they own factories in China or work directly with them. This has helped companies like Sheen to become international e-commerce giants.
Similarly, Miniso’s Ye said her strategy in the US is combining the company’s supply chain network in China with the work of New York designers — so products can go from design to store shelves in about three months.
This process can take six months or even a year if the design firm needs to find its own factories, Yeh claimed.
“Abroad, what we lack right now are design ideas suitable for local people,” he said. He said Miniso plans to open its North America product development center later this year and is looking for office space in New York.
June extension
Other Chinese companies have pressed on with overseas expansion despite Covid travel restrictions.
Alibaba’s fintech affiliate Ant Group announced this in June Launched a digital wholesale bank in Singapore after receiving approval from the Monetary Authority of Singapore.
Also in June, the Hong Kong-listed toy company pop marto Tested American waters by opening its first temporary location near Los Angeles. The company sells sets of collectible toy figures — in unmarked boxes. This means that a customer may get a new toy to add to the collection, or the same toy that the customer has already purchased.
Like Miniso, Pop Mart stores have become common in Chinese malls. Universal Beijing Resort also has a Pop Mart store.
Localization Challenges
It remains to be seen whether recent overseas developments will last for those Chinese companies.
For business or geopolitical reasons, many Chinese businesses have not found success overseas. Take ZTE’s failure to expand its smartphone business in the US following US sanctions.
Wildly successful companies like TikTok, the short video company owned by Beijing-based ByteDance, have come under US government pressure on data security concerns.
This is not to mention the inherent challenge of becoming an efficient international organization. A CNBC Report on Chinese Tech Companies The business culture found at home – which includes heavy use of Mandarin and long hours – often made its way overseas and discouraged local workers from staying.
But whether electric cars or home appliances, talks with several Chinese businesses reveal a deeper but vague ambition that hasn’t been hit by the pandemic: to become a global company.
Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.