Chinese firms are entering a new phase of global expansion, shifting from exporting products to building overseas supply chains and expanding capabilities, reflecting a more mature and diversified global strategy, industry experts said.

Ning Loh, managing director and head of global credit strategy at Moody's Ratings, said: "Chinese companies have developed strong manufacturing capabilities with cost advantages and very deep and developed domestic supply chains. The country is moving away from lower-value exports to a much broader global strategy around technology and Chinese brands."

Loh said the latest wave of Chinese outbound direct investment has been "more strategic, selective and diversified", as companies are expanding overseas to offset slowly recovering domestic demand, mitigate geopolitical and tariff risks and internationalize their supply chains, production capacity and technologies.

Unlike earlier waves of outbound investment, which centered on securing natural resources and pursuing large mergers and acquisitions in developed markets, today's investments are closely tied to supply chain security, clean energy, advanced technologies and critical minerals, he added.

The shift is evident when taking a look at where Chinese companies are investing, the sectors they are targeting and the motivations behind their overseas expansion.

South and Southeast Asia — along with Latin America — have emerged as major destinations for Chinese investment, while North America's share of China's outbound direct investment has declined.

The sectoral focus has also changed markedly. Whereas Chinese companies previously concentrated on traditional infrastructure, property services and financial assets, the past five years saw investment increasingly directed toward electric vehicles, batteries, advanced technologies, renewable energy, critical minerals and electronics.

Born in Malaysia and having lived in Thailand, Loh said he has witnessed the transformation firsthand through the rapid rise of Chinese EV brands across Southeast Asia.

"A couple of years ago, very few people had heard of brands like Chery or BYD," he said. "Now, they are among the best-selling cars and have completely changed the market."

He said artificial intelligence is also accelerating the overseas expansion of Chinese companies by enabling them to localize faster, improve customer service and reduce costs.

The rapid deployment of AI, together with broader technological and innovation upgrades, is expected to fuel a new wave of overseas expansion by Chinese service providers across sectors including technology, logistics and travel, said a Moody's Ratings report released on June 10.

Loh said overseas expansion has become an increasingly important strategy for Chinese companies as domestic demand remains relatively weak compared with the country's manufacturing capacity. Expanding abroad allows companies to diversify their markets while reducing exposure to trade tensions and tariffs. At the same time, China is seeking to secure reliable access to critical minerals and key technological inputs needed to support the sectors driving its economic growth.

Sherman Hung, deputy CEO &head of institutional banking group at DBS China, said supply-chain diversification is a natural part of Chinese companies' global expansion, driven by the need to expand market reach, maximize profitability and build resilience.

"What we observe across our ASEAN network is companies optimizing their Asia-Pacific footprint by establishing regional manufacturing and logistics hubs — creating a synergistic model that combines Chinese capabilities with regional nodes," said Hung.

"On industrial upgrading, Chinese enterprises have built genuine global competitiveness in renewable energy, EVs, smart equipment and advanced manufacturing. Their outbound investment increasingly represents an extension and localization of those capabilities, not just a search for cheaper inputs."

Looking ahead, Hung said the green economy is expected to remain the most prominent investment option, with Chinese companies in clean energy and energy storage leveraging their scale advantages to meet growing global demand.

He also highlighted two other areas with significant growth potential: consumer-related sectors in emerging markets and high-end manufacturing, where China's expertise in smart production and factory management is increasingly being adopted overseas.

"Emerging markets, particularly ASEAN, are becoming the preferred destination for a growing number of Chinese enterprises going global, driven by their growth potential, geographical proximity, cultural affinities and favorable policies. Since the RCEP (Regional Comprehensive Economic Partnership) came into effect, regional trade and investment facilitation has further lowered the threshold for Chinese companies entering ASEAN markets."

Hung said a defining feature of the current phase of Chinese companies' global expansion is an increasing focus on localized operations, adding, "Companies are placing greater emphasis on building brands, channels and teams within target markets to deeply integrate into the local economy."