In Depth: A New Chinese Food and Beverage Wave Hits Southeast Asia

A new wave of Chinese food and beverage (F&B) chains, including Sichuan hot pot, braised chicken rice, and pickle fish soup, is making its mark internationally beyond traditional dishes like kung pao chicken and sweet and sour pork [para. 1]. The expansion of Chinese F&B companies into Southeast Asia, North America, and Europe has been driven partly by saturation in the domestic market [para. 2]. In 2023, nearly 3.19 million new F&B enterprises were registered in China, marking a 24.2% increase from the previous year [para. 2]. This rapid growth is evidenced by significant overseas recruitment and operational capacity expansions, with some company payrolls growing over 200% annually for the past three years [para. 3].

However, these ambitious expansion efforts face challenges in building solid supply chains and addressing localization issues [para. 5]. Sichuan hotpot giant Haidilao International Holding Ltd. began its international foray twelve years ago by establishing a presence in Singapore and now has a significant number of overseas outlets [para. 6]. Other brands like Tai Er, Zhangliang Malatang, and Yang’s Braised Chicken Rice have also successfully expanded internationally, showcasing diverse Chinese cuisines [para. 7].

The competitive landscape for small F&B businesses demands high levels of operational efficiency, cost management, and innovation [para. 8]. On the beverage side, Mixue, China’s largest bubble tea chain, opened its first overseas store in Hanoi in 2018 and has since expanded to 11 countries with over 4,000 stores as of September 2023 [para. 9]. Heytea, Shuyi Tealicious, Chabaidao, and Chagee have also expanded internationally, reflecting the broader trend among Chinese beverage brands to tap into global markets [para. 9]. Coffee chain Luckin Coffee, having bounced back from previous scandals, opened its first overseas store in Singapore and has expanded to 37 stores by June 2023 [para. 10].

Franchising is a key strategy for many Chinese F&B brands seeking international footholds; it allows rapid growth and leverages local business acumen [para. 12][para. 13]. Zhangliang Malatang, for example, received significant interest for franchising opportunities, especially from the U.S., Southeast Asia, and Europe, which aided its rapid expansion [para. 15]. Countries like Indonesia, with large populations and favorable cost structures, offer significant business opportunities, reducing the payback period for F&B investments to between six months and a year [para. 16].

Singapore serves as a gateway for many Chinese brands aiming to venture into Western markets, acting as a testing ground for their capabilities and consumer interest [para. 18][para. 19]. Businesses like Luckin Coffee and Chagee have established multiple outlets in Singapore before moving to other regions [para. 19]. Adaptation to local preferences is crucial for success; for instance, post-pandemic market dynamics in regions like Indonesia shape consumer spending habits favorably for Chinese F&B chains [para. 21].

Despite potential, Chinese F&B brands face supply chain hurdles and workforce management challenges in overseas markets [para. 29][para. 30]. Franchised operations aid growth but highlight issues like supply chain immaturity and regulatory discrepancies between China and host countries [para. 31][para. 32]. Localization is imperative to sustain international success, ensuring brands adjust to local market norms without compromising their core strengths [para. 32]. Effective localization strategies include tailored menus and operational adjustments to match local customs and expectations, critical for long-term global success [para. 32][para. 33].