**Abstract**
Why should enterprises go global? There are 224 countries and regions in the world, with 193 recognized nations and 31 additional regions. Out of these, 174 have established diplomatic relations with China, while 198 maintain active trade ties. Despite this vast network, the export of abrasive products is still concentrated mainly in Southeast Asia, Europe, and the United States. Beyond these regions, the market share for abrasives remains relatively small, indicating a huge untapped potential in international markets. This is why companies must expand globally to seize new business opportunities.
As we know, China is one of the largest manufacturing nations, with many products ranking first in global output. However, this success has also led to overcapacity, putting pressure on energy, resources, and the environment. Industries like steel face severe overproduction, forcing downstream companies to cut costs to remain profitable. Rising raw material and labor costs have further squeezed labor-intensive sectors such as hardware abrasives, eroding their traditional cost advantage. With shrinking demand and rising expenses, going global becomes a necessary strategy to find broader markets and escape the cycle of overcapacity.
To shift toward a more sustainable economic model, Chinese enterprises must embrace overseas expansion through investment, mergers, and acquisitions. By leveraging foreign resources, they can enhance China’s position in the global division of labor and foster mutual growth with other countries, especially developing ones. While each company may have different motivations—such as securing raw materials, expanding markets, or extending their supply chains—the ultimate goal is to maximize global competitiveness and economic returns.
For example, neighboring countries like Vietnam, Cambodia, Laos, and Indonesia are rich in bauxite, a key raw material for advanced abrasive production. Vietnam alone holds 10 billion tons of bauxite, compared to just 2 billion in China. These resources offer a strategic opportunity for Chinese enterprises to invest and develop new markets.
**What Are the Advantages of SMEs Going Global?**
Small and medium-sized enterprises (SMEs) often face challenges such as limited capital and technology. However, they also possess unique strengths when going global. First, private SMEs in China are agile and adaptable, better suited for foreign environments. Their resilience, developed in a competitive domestic market, gives them an edge in international settings.
Second, SMEs can benefit from technology transfer. Many developing countries lack advanced equipment, making Chinese technology suitable for their needs. In return, these countries may offer preferential policies, helping SMEs reduce costs and increase returns.
Third, SMEs can enter emerging markets with lower investment. While their technology may not be the most advanced, it can meet the specific needs of developing countries, leading to high returns with minimal capital. However, SMEs also face risks such as poor risk management, limited market knowledge, and weak financing capabilities.
To overcome these challenges, SMEs should go together, forming clusters that can access better policies and support. They should conduct thorough research before entering foreign markets and rely on intermediaries for market analysis. Attracting skilled talent, both local and foreign, is also crucial for long-term success.
**Where Should Companies Go?**
While some companies aim to enter developed markets like the U.S. or Europe, it may be more practical to target neighboring countries. ASEAN nations, for instance, are economically aligned with China but at a slightly slower development stage. These markets offer great potential for Chinese products, supported by existing trade agreements that protect Chinese enterprises.
Going global isn’t just about exporting—it’s about investing and building long-term relationships. Developing countries often welcome foreign investment, offering access to their markets in exchange for technology and capital. This approach helps sustain China’s double-digit export growth in the coming years.
**Government Support for Going Global**
The Chinese government has introduced various policies to support SMEs in international expansion. For example, financial services have been improved to ease financing difficulties. Trade agreements with ASEAN and other regions provide favorable conditions for Chinese businesses. Government subsidies for participation in international exhibitions also help reduce the cost of market entry.
**The Role of Industry Associations**
Industry associations play a vital role in supporting companies’ global efforts. They act as bridges between the government and businesses, providing guidance, information, and legal support. Associations also help coordinate pricing strategies to avoid unfair competition and reduce trade disputes.
In developed countries, industry associations actively assist companies in exploring new markets, conducting research, and analyzing investment risks. Similarly, Chinese associations should strengthen their role in supporting SMEs, helping them navigate international markets and build stronger global presence.
By working together, governments, associations, and enterprises can create a more supportive environment for global expansion, ensuring long-term success in the international arena.
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