On a recent cold day in February, Virginia resident Raymond Fong sat outside the Tysons Corner mall for nearly two hours on a stool he brought from home to wait in line for a taste of milk tea from a new China-based beverage business.
China’s popular fruit and milk tea chain, Heytea, is one of a number of Chinese businesses that are looking for better economic opportunities abroad amid a slowing economy at home.
While U.S. President Donald Trump’s tariffs are creating more uncertainties for Chinese businesses at home, a growing number of companies from China are expanding in the U.S.
Heytea made its debut in the Washington metropolitan area on Valentine’s Day, marking the opening of the company’s 27th store in the United States. Heytea has opened nearly 80 stories outside China.
Fong visited the store just days after it opened.
“There were so many people in line that the mall was full, and we had to line up outside,” Fong told VOA’s Mandarin Service.
Since opening in 2012, Heytea has mostly focused on serving China’s domestic market. But in 2023, the company made a rapid shift to expand its reach overseas to countries including the U.S., United Kingdom, Australia, Canada, Malaysia and South Korea.
Other popular Chinese food and beverage brands have also made inroads into international markets.
Research company Rhodium Group reported a rebounding of overall Chinese investments abroad since the pandemic. Outbound investments by Chinese companies bottomed out at $47 billion in 2020 but then increased to $67 billion in 2022 and $103 billion in 2023, according to the Rhodium Group.
While food and beverage brands are just a small slice of these investments, these brands are what consumers see.
“Some people call 2023 ‘the first year of going overseas’ [for restaurants and beverage businesses]. I think there are several reasons. One is that the domestic market is no longer viable,” said a Beijing-based macroeconomic researcher who requested anonymity for fear of harassment from Chinese police.
The researcher added that the businesses “are all listed in Hong Kong and have raised funds. Hong Kong is an open market. They are listed there, raised money, and then they will not invest back to mainland China, so they want to test the waters in the United States.”
Success in Vietnam
As early as 2018, Mixue Ice City, a popular ice cream and tea chain founded in Henan province, China, began opening stores in Vietnam and then began picking up that expansion over the past few years with shops opening in South Korea, Australia, Malaysia and Singapore. The company now has over 7,000 stores in 11 countries, with more than 1,000 of those stores located in Vietnam.
Founded in Sichuan province, China, in 1994, hot pot chain Haidilao has restaurants in numerous countries and went public on the U.S. Nasdaq stock market in May 2024.
Eric Wong, a New York-based investor, said Chinese food companies’ decisions to expand overseas were made out of necessity, given the current state of China’s economy.
“Their profit margins within China are falling. The domestic market is very competitive, so they want to develop overseas,” Wong told VOA.
But operating overseas includes challenges, especially for businesses that have been accustomed to operating within China and using local supply chains.
“Take Haidilao as an example. They can succeed in China because they own the entire industrial chain. It hasn’t established this same advantage overseas, so it is more difficult to do business,” Wong said.
Still, Chinese companies can make high profits from international storefronts, despite the difficulties of taking the business abroad, the Beijing-based researcher said.
“Although the cost of opening a store in Europe and the United States is very high, it is still profitable. Because the cost is high, the threshold is high, and the profit margin is high. Of course, their market is not that big because the main market is Chinese,” the researcher said.
Food and beverage companies are just one part of a larger picture of Chinese producers seeking profits abroad. Expansionary efforts from brick-and-mortar companies such as Pop Mart and Miniso, which produce collectible toys and figurines, and online retailer Temu, display a cross-industry trend of desires to develop in Western markets.
Consumers within America have embraced the products and services from the three companies, with around 18% of American households having shopped on Temu, according to Earnest Analytics.
Despite their current successes, the future of these already complex operations with U.S. markets, given new tariffs levied on Chinese goods, is uncertain, said Wong.
According to Wong, the proportion of business conducted within the U.S. is already “getting smaller and smaller” as these companies look toward other markets without strict tariff policies.
VOA’s Katherine Michaelson contributed to this report.
