Frost & Sullivan in collaboration with PingCAP release the 'White Paper on the Global Operations of Chinese Enterprises - A Sustainable Journey from 'Going Global' to 'Integrating into the Local Economy'

Frost & Sullivan analyzed and evaluated the average level of Chinese enterprises going global and their globalization efforts in major industries from four dimensions: product globalization, R&D & production and channel globalization, brand globalization, and cultural globalization. This is to gain an in-depth understanding of the current situation of Chinese enterprises going global and their globalization efforts.

Overall, due to the influence of different policies and regulations, market demand, industrial chain structure, cultural compatibility, etc., the process of outbound expansion and globalization in various industries has shown different rhythms and stages:

• E-commerce, gaming, fintech, culture and entertainment, and information technology have accumulated rich experience in global expansion, forming relatively mature models. They are basically at a stage of in-depth development in globalization;

   

• Life sciences, consumer electronics, and automotive are currently in a stage of diversified overseas expansion, actively promoting the transition from overseas expansion to globalization;

   

• The overseas expansion of other high-tech manufacturing (including robotics, advanced manufacturing equipment, semiconductors, aerospace equipment, etc., excluding life sciences, consumer electronics, and automotive), energy, and education industries has been continuously deepening under the promotion of policies and technology. However, the progress has been relatively slow, mainly reflected in the need to further strengthen R&D and production globalization as well as channel globalization and brand globalization capabilities.

Source: Analysis by Frost & Sullivan

The current situation of various industries reflects that Chinese enterprises' overseas expansion and globalization are facing three changes:

• Upgrading the value proposition for going global

Many companies are gradually realizing that relying on the strategy of 'homogeneous low prices and high-quality at equivalent prices' is difficult to achieve high profits and sustainable growth in overseas markets. Therefore, companies are beginning to build channel ecosystems, enhance cultural adaptability, and shape global brands;

In the early stages, Chinese enterprises released their domestic redundant resources into overseas markets and leveraged their original advantages by going global. However, with the slowdown in global economic growth and the compression of profit margins in domestic industries, the motivation for globalization has shifted towards addressing survival challenges and building sustainable growth engines. Enterprises are exploring new markets, integrating global resources, enhancing innovation capabilities, and reducing dependence on single markets;

Enterprises have realized that relying solely on experience and resources in the Chinese market is insufficient to cope with global competition. They need to shift towards a decentralized model, formulate strategies tailored to local conditions, and achieve in-depth development. At the same time, strategic layouts have also begun to focus on blue ocean markets to avoid fierce competition with domestic and international brands in mature markets.

The 're-globalization' environment is a key factor driving changes in overseas expansion and globalization patterns. Compared to the past era when trade barriers were mainly reduced and international trade was promoted, emphasizing the complementarity of economic division of labor, the connotation and form of 'globalization' have been enriched and reshaped.

In this environment, countries have restarted efforts to strengthen the internal industrial cycle within their own borders (such as in the semiconductor industry, increasing investment in the entire supply chain and reducing dependence on external supply), along with enhanced corporate supervision and restrictive regulations. At the same time, high-tech has become the core driving force for competition and cooperation among enterprises and between countries. The experiences and methods of 'globalization' from the past are no longer applicable to the current stage, and Chinese companies need to reconstruct their global competitive thinking.

Source: Analysis by Frost & Sullivan

On the one hand,Some countries have begun to strengthen domestic circulation policies to protect local industries, setting up more complex trade barriers and regulatory requirements in the international market.On the other hand,Geopolitical factors continue to affect the stability of international trade, posing multiple obstacles for companies expanding overseas operations. Finally, the traffic dividend from going global is gradually fading, making it difficult for companies to rely on opportunism to achieve results. They need to pay more attention to quality and healthy development to achieve long-term competitive advantages in overseas markets. Against this backdrop, companies face six major challenges:

Laws and regulations are complex and diverse, making it difficult for Chinese enterprises to understand and comply with local legal requirements;

Globalization development has made organizational structures, business segments, IT systems, value chains, and other aspects increasingly diverse and complex. The lack of uniformity in processes and standards brings challenges such as complex internal collaboration, low integration efficiency, and difficulties in data integration;

Differences in language, cultural background, and habits among different countries and regions pose barriers in areas such as demand understanding, customer resonance, talent management, communication, and collaboration;

The international situation is becoming increasingly complex, and overseas enterprises often encounter measures such as investigations, penalties, and bans. In addition, unpredictable events globally (such as epidemics and floods) may lead to trade disruptions and business closures;

The modern IT architecture construction of enterprises has not considered the needs for global expansion, making it difficult to synchronize and iterate technologies. At the same time, insufficient awareness of data governance has led to the inability to realize the value of global data assets;

In some areas, there is a low acceptance and insufficient awareness of Chinese brands, making it difficult for enterprises to smoothly enter the market and increase profits.

Source: Analysis by Frost & Sullivan

To address the challenges under the new landscape, enterprises should continuously update and upgrade global digital and intelligent infrastructure technologies, improve their data strategies, change management thinking and culture, so as to fully leverage the value of global digital and intelligent infrastructure technologies. Depending on different challenges, enterprises can use a compass for technology matching to develop solutions and strategies for global digital and intelligent infrastructure.

The compass's innermost layer refers to the challenges that enterprises need to address, followed by cloud computing, data technology, and artificial intelligence as the three major digital intelligence infrastructure layers. These three technologies are both interdependent and synergistic:

The key infrastructure for enterprises going global, providing the necessary infrastructure and flexible resources for data technology and AI;

Data is the key support for enterprises to unlock data value and make precise decisions during global operations. Through effective data management, data quality and processing efficiency can be enhanced, thereby strengthening business insight, improving decision accuracy, and enhancing AI training outcomes.

AI can optimize and enhance the overall efficiency of technical solutions. By integrating AI, cloud computing and data technology can improve the efficiency, accuracy, and functionality of automated operations and maintenance. At the same time, AI technology can quickly process and analyze large-scale, multimodal data to provide enterprises with more valuable insights.

Enterprises can break down the different levels of the compass in detail. For example, they can address compliance challenges involving operations, data, and AI, select matching technologies based on these challenges, and ultimately formulate the optimal global solution.

Source: Analysis by Frost & Sullivan

As enterprises are undergoing a deep development from 'going global' to 'entering local markets', the concept of technology suppliers also needs to shift from 'value addition' to 'co-creation of value'. This means not only providing technology but integrating it into the enterprise's global strategic needs, including technology that adapts to local needs, the transfer of local experience, and localized operational support (local technical support teams, multi-language documentation resources, ecological resource sharing, etc.).

Globalization genes influence the business strategic direction, degree of cooperation and openness, and technological innovation capabilities of technology suppliers. They determine the upper limit of their ability to engage in 'value co-construction' and the sustainability that accompanies the implementation of a company's globalization strategy. The main characteristics and values of technology suppliers with globalization genes are as follows:

• Pay attention to cross-regional and cross-cultural needs and characteristics:Pay attention to cross-border compliance requirements and fully consider cross-regional and cultural characteristics when designing products;

   

• Focus on global talent and team management and collaboration:Emphasize building a diversified team globally and enhancing cultural understanding and localization capabilities;

   

• Actively support ecological cooperation and advocate the globalization 'win-win game' strategy:A mutually beneficial and healthy partnership network provides enterprises with reliable and sustainable technical services;

   

• Delve into the R&D of cutting-edge technology solutions:Maintain competitiveness in the global environment, and continuously optimize the technical usage efficiency and experience of global users.

Source: Analysis by Frost & Sullivan

Both PingCAP and Amazon Web Services are global pioneers that advocate for 'positive-sum game'.

In terms of global layout, PingCAP is based on a globally oriented open-source system. It continuously improves its global organizational structure and diversified ecosystem, creates a global business model, and continues to optimize and enhance database service capabilities. It has gained customer and market recognition in developed economies such as Europe, America, and Japan, as well as emerging markets in the Asia-Pacific region.

As a leading cloud provider, Amazon Web Services (AWS) safeguards the implementation of enterprises' globalization strategies with its cloud as an enabling platform, leveraging its strong technological innovation capabilities, globally leading partner network, globally accessible infrastructure, mature and rich global customer practices, as well as profound compliance and industry practice experience.

The collaboration between the two parties in technology and ecosystem can significantly enhance their respective strength and service capabilities, better enabling the sustainable implementation of the enterprise's globalization strategy:

1) Empowering localized global infrastructure:Global infrastructure empowers enterprises to easily deploy resources and improve the sustainability of global businesses based on a global disaster recovery architecture. At the same time, by inheriting cloud service compliance regulatory certifications, enterprises can more efficiently build a global compliance system.

2) Cloud-native databases deliver value to all:TiDB Serverless provides a high-performance database service that requires no resource planning, features extremely low cost, extreme elasticity, and instant scalability. By integrating TiDB Serverless with HTAP capabilities, more flexible AP and TP expansion capabilities can be formed, thus meeting the needs of real-time analysis with high concurrency and interactive analysis at different scales;

3) Open technology ecosystem helps enterprises rapidly build global data technology capabilities:TiDB has an open technology ecosystem, is highly compatible with MySQL, interoperates with mainstream databases through diverse tools, and is deeply integrated with data technology stacks. It can provide one-stop data real-time aggregation and synchronization capabilities, enhancing the flexibility of enterprise technology operations and maintenance. By leveraging the service ecosystem of Amazon Cloud Marketplace, enterprises can quickly build global data technology capabilities on demand.

1) AI-Ready TiDB Serverless:Based on high-performance cloud services, TiDB Serverless fully leverages the advantages of key component full separation design and automated resource scheduling capabilities. It enhances database real-time analysis and second-level resource scheduling capabilities. It provides elasticity of Scale to Zero and cost savings of 30 - 80%, making TiDB Serverless an AI-ready new generation database service. TiDB Servelress adds vector search: continuously improving the ability to combine AI, supporting vector search, allowing MySQL users to conveniently build RAG-related AI applications directly in the TiDB database.

2) Amazon Web Services provides comprehensive AI development and application tools:AI tools such as Amazon SageMaker and Amazon Bedrock provide convenience for enterprises to build AI capabilities, enabling them to establish a solid foundation of intelligent capabilities with lower technical barriers.

Based on a profound understanding of the needs of Chinese enterprises and the overseas market, and rich service experience, PingCAP's database best practices are combined with Amazon Web Services' cloud service best practices. This enables us to tailor solutions to local conditions and industries, helping enterprises build capabilities that meet local needs and enhance their understanding of localization requirements, thereby achieving in-depth development.

With diversified solutions and the support of ecosystem partners, localized enterprise solutions can precisely match needs, quickly respond to market changes, achieve agile and rapid implementation and optimization, and thus achieve business success globally;

By leveraging the local ecological networks and resources of both parties, enterprises can more easily establish and maintain relationships with local customers, suppliers, and partners, thereby achieving localized connections and quickly integrating into the local market. Through local resource sharing and collaboration, enterprises can achieve continuous growth and innovation in business operations across regions locally.

Source: Analysis by Frost & Sullivan