Chinese Industrial Enterprises Overseas Revenue Share Rises to 25%, Gross Profit Expected to Grow 35%

Overview

This report systematically demonstrates the trend of improving international competitiveness of Chinese industrial enterprises from both macro and micro dimensions. It argues that the overseas revenue share of Chinese non-financial A-share companies will continue to expand from 19% in 2025 to 25% in 2030; this increase will have a significant pull effect on the overall gross margin structure. Based on analysis of 17 industrial sub-sectors and 14 major export-oriented departments covered by UBS, combined with China+1 investment tracking data, it draws a detailed picture of Chinese enterprise globalization layout. The report emphasizes that the synchronous rise in overseas gross margins (driven by higher international prices and capacity utilization) is expected to release additional momentum for A-share total gross profit growth beyond simple domestic growth.

Core views

The internationalization process of Chinese industrial enterprises shows acceleration, among which the expansion of overseas revenue contribution is the core driving force of this growth cycle. The report estimates that assuming a 5% CAGR for domestic A-share revenues between 2025-30, stable overseas gross margins, and an overseas revenue share reaching 25%, the overall gross profit of A-shares will achieve 35% growth, far exceeding the growth provided by domestic income growth alone. From a regional distribution perspective, Europe and ASEAN have become the most important overseas earnings sources at the current stage, contributing 21% and 18% of overseas export growth shares respectively. Meanwhile, Africa, due to expected macro environment improvement and positive commodity price outlooks in 2026-27, is becoming a long-term growth opportunity. In Q1 2026 export data, China's export growth rates to Europe and ASEAN reached 19% each, while exports to Africa grew even faster at 28%, showing actual conversion of growth momentum. From the driving mechanism perspective, exports and China+1 investments proceed in parallel. Among the 17 covered sub-sectors, 14 primarily rely on exports to drive overseas revenue growth, but the China+1 strategy (referring to building factories in ASEAN, India, etc., to avoid trade friction and supply chain risks) also plays an important supplementary role in overseas expansion for multiple industries. Automotive and power supply chain enterprises are the most aggressive in such战略布局. From industry differences, wind power equipment, new chemical materials, solar energy, etc., see overseas revenue compound annual growth rates of approx. 35%, 25% respectively during 2025-30E, leading overall levels, reflecting particularly outstanding global competitiveness in new energy and material sectors. Conversely, traditional industries like oil & gas, chemicals have relatively lower overseas revenue shares (expected 5-12% by 2030E), but absolute growth space still exists. The expansion trend of overseas gross margins provides quality assurance for this round of revenue growth. Most covered sub-sectors expect overseas gross margins to rise, mainly benefiting from: 1) Upward cycle of international commodities and high-end manufacturing products prices; 2) Gradual improvement in capacity utilization after Chinese enterprises build factories and deepen investments abroad. Combined with the above two factors, overseas gross margins are generally higher than domestic levels, further amplifying gross profit growth effects based on the increase in revenue share.

Analysis framework

The report adopts a combined method of top-down and bottom-up analysis. At the macro level, based on historical A-share data and forward-looking estimates, the trajectory of overseas revenue share for total non-financial A-share companies is calculated; at the micro level, it aggregates overseas earnings forecasts from UBS covered multi-industry analysts on respective covered enterprises and industries, as well as China+1 investment tracking and China export monitoring data. This combination ensures both rigor in top-level logic and precision in enterprise-level predictions. The report focuses on two major transmission mechanisms: 1) Structural optimization shifting revenue share from domestic to overseas; 2) Quality premium where overseas gross margins are relatively better than domestic. Through sensitivity analysis, the report quantifies gross profit growth space under different assumption scenarios, providing multi-level references for investors.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply Chain Upstream/Midstream/Downstream Transmission

  The report tracks changes in the macro environment of Chinese export markets and investment destination countries, analyzing how they transmit to orders, capacity, and gross margins of specific industries and enterprises

  For example, Middle East geopolitical conflict causing disruption to global supply chains may instead benefit Chinese enterprises due to their supply chain resilience gaining opportunities; African macro improvement and rising commodity prices directly boost demand for Chinese construction machinery and chemicals locally

• Industry/Industrial Analysis FrameworkVolume-Price Split

  The report decomposes overseas revenue growth into volume (revenue share increase, enterprise count and order increase) and price (overseas commodity price rise, gross margin expansion) dimensions

  This decomposition helps understand sustainability: volume growth reflects expansion depth, price growth reflects market recognition of pricing power for Chinese products

• Company Fundamentals and Financial FrameworkWorking capital cycle

  The report implicitly analyzes the time path of capacity construction and capacity utilization improvement in overseas investment (China+1 strategy)

  i.e., dynamic changes in gross margins from investment decision -> factory building -> full production; initial period may face pressure due to depreciation and low capacity utilization, mid-term expands as utilization rises

• Industry/Industrial Analysis FrameworkSupply-demand framework

  The report emphasizes the combination of increased demand for Chinese products in overseas markets (rising global demand for EVs, clean energy, construction machinery) and China's supply competitiveness

  For example, strong European demand for EV components and renewable energy equipment coincides exactly with advantages of Chinese auto parts and wind power enterprises

• Macroeconomic frameworkCredit/debt cycle

  The report notes Africa's 2026-27 macro environment improvement and favorable commodity prices, implicitly implying the upswing phase of global commodity cycles and emerging market credit cycles

  When commodity prices rise and African economies' debt servicing capability improves, local demand and import ability for Chinese products such as construction machinery and chemicals simultaneously strengthen

• Valuation MethodSOTP Segment Valuation

  The report values the same enterprise across different industries separately in valuation comparison tables, implicitly using segment valuation methods to handle different growth rates and gross margins for domestic and overseas businesses

  This method allows investors to assign premiums to high-growth overseas business segments and lower multiples to mature domestic business segments

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BYD（1211.HK）

  One of the most aggressive enterprises in passenger car overseas expansion; expected large increase in overseas revenue share, benefiting from global EV wave

  Strengths

  Leading position in global EV and battery industry chain; products rapidly recognized in emerging markets like ASEAN, Latin America; vertical integrated supply chain reduces costs

  Weaknesses

  Faces fierce competition from local EV enterprises and Tesla in European market; brand awareness still lags behind traditional luxury cars

  Comparison

  Stronger global EV competitiveness compared to traditional automakers like Geely, Great Wall; faster internationalization pace compared to state-owned enterprises like BAIC, SAIC

  Risks

  Not explicitly pointed out in report; potential risks include escalation of European trade friction, exchange rate volatility, severe raw material price fluctuations

• 东方电气（600875.SS）

  Power equipment enterprise, fastest expected overseas revenue growth (25%+ CAGR); Wind power equipment, energy storage are main growth engines

  Strengths

  Leading position in global wind power market; new energy storage business growing fast; Europe is core target market

  Weaknesses

  Intense competition from local European wind power equipment enterprises; cost management pressure on raw material supply chain

  Comparison

  Compared to professional wind power enterprises like Mingyang Smart, Goldwind, Dongfang Electric's diversified platform advantage makes its comprehensive competitiveness stronger

  Risks

  Not explicitly pointed out in report; subsidies policy changes for wind power, supply chain disruption, raw material price fluctuations are main hazards

• 隆基绿能（601012.SS）

  Solar equipment leader; high overseas revenue share, benefiting from global clean energy investment acceleration; Middle East, ASEAN, Africa are key markets

  Strengths

  Highest global market share in solar cell modules; industry-leading cost control capability; deep overseas capacity layout

  Weaknesses

  Risk of overcapacity becomes prominent after rapid expansion; impact of international trade friction (e.g. Indian anti-dumping)

  Comparison

  Leads Jinko, JA Solar peers in technology and cost control; deeper globalization progress compared to domestic competitors

  Risks

  Not explicitly pointed out in report; key risks include capacity utilization decline, intensifying international competition, subsidy retreat

• 克肤（002850.SZ，上市代码为科德莱）

  Auto parts enterprise, strong expectation for increasing overseas revenue share; Europe is main market

  Strengths

  Deep integration into European OEM supplier system; product certification and quality standards meet international levels

  Weaknesses

  High customer concentration in traditional European automakers; adaptation challenges during EV transition

  Comparison

  Higher European concentration compared to diversified auto parts suppliers like Joyson Electronics, Desay Battery

  Risks

  Not explicitly pointed out in report; risk of European auto industry transition, exchange rate volatility, insufficient new customer acquisition are major risk factors

• 中兴通讯（000063.SZ）

  Although not highlighted in coverage table, as electronic equipment exporter, benefits from trend of rapid growth in tech product exports in 2026 Q1

  Strengths

  High global market share in 5G infrastructure; deep customer base in emerging markets

  Weaknesses

  Market restrictions from US and some Western countries; geopolitical risks

  Comparison

  Higher international market openness compared to Huawei; significant cost advantage compared to international rivals like Qualcomm, Ericsson

  Risks

  Not explicitly involved in report; US sanctions, trade friction, intensifying 5G competition

Key data

• Non-Financial A-Share Enterprise Overseas Revenue Share19% in 2025 → 25% in 2030EUp 2 percentage points from 17% in 2024 to reach 19% in 2025; expected to increase another 6 percentage points between 2025-30
• A-Share Gross Profit Growth ForecastCAGR approx. 35-45% (2025-2030)Based on sensitivity analysis assuming 25% overseas revenue share, stable overseas gross margin, and 5% domestic income CAGR; growth space larger if overseas gross margin further expands
• Overseas Gross MarginExpected 21% in 2025 (Total Non-Financial A-Share), higher than domestic gross marginShows overseas business profit quality is superior to domestic
• Proportion of Export-Oriented Sectors among Covered Sub-industries14/17 (82%)Mainly driven by exports to grow overseas revenue; another 3 industries rely more on China+1 investment
• Wind Power Equipment, New Chemical Materials 2025-30E Overseas Revenue CAGR>25%Fastest growth among all covered industries, reflecting global competitiveness in new energy and material sectors
• Q1 2026 China's Export Growth Rate to Europe+19% YoYFaster growth in automotive, technology products, reflecting structural optimization of China's competitiveness
• Q1 2026 China's Export Growth Rate to ASEAN+19% YoYListed alongside Europe as most important export growth markets
• Q1 2026 China's Export Growth Rate to Africa+28% YoYFastest growth rate, indicating Africa is becoming an important growth pole
• Contribution of Emerging Markets to Overseas Revenue of Chinese Industrial GoodsASEAN accounts for 18%, Africa accounts for 6% (expected to grow to double-digit share by 2030E)Reflects rising status of emerging markets in global value chains and active adaptation by Chinese enterprises
• Number of Top-Preferred Covered Entities26 entities received Buy ratingsIncludes cross-sector leaders and niche champions such as BYD, Dongfang Electric, Longi Green Energy, etc.

Impact & implications

The conclusion of the report has significant implications for Chinese industrial listed companies, relevant industry funds, and macroeconomic prospects. From the listed company perspective, the combined effect of increasing overseas revenue share and expanding overseas gross margins means that for the same domestic revenue growth rate, the enterprise's overall profit growth will exceed expectations; this effect is particularly significant for capital-intensive industries such as automotive, power equipment, and chemicals, possibly becoming a revaluation driver. From an industrial structure perspective, this trend reflects the achievements of China's industrial upgrading - global competitiveness has relatively improved in high-end manufacturing, clean energy, new materials fields, while overseas share of traditional low-end manufacturing lags relatively behind, reflecting industrial differentiation and optimization. From a national economic perspective, this marks a shift in China's economic growth momentum from purely domestic demand-driven to coordinated domestic and foreign demand, from export dependence to diversified target markets. Africa, ASEAN等地 become new growth poles, not only providing export channels for China's excess capacity but also promoting economic integration and community-building of interests with these regions. At the same time, the relative advantage of overseas gross margins also reflects the rising pricing power of Chinese enterprises in international markets, suggesting Chinese industrial goods are gradually transforming from OEM, low-price competition towards brand, technology-driven.

Risks

• Continued slowdown in China's economic growth leads to contraction in domestic demand, dragging down overseas expansion momentum
• High-tech industry preferential policies (e.g., tax incentives) may be cancelled, affecting enterprise profits
• Escalation of international trade friction (tariffs, anti-dumping, anti-subsidy, etc.) hinders exports and overseas investment
• Domestic and international competitors (including developed country local enterprises and other emerging market enterprises) encroaching on Chinese enterprises' overseas market share
• Expansion of geopolitical conflicts interfering with supply chains and target markets (e.g., Middle East situation, worsening Ukraine issue continues)
• Exchange rate volatility may erode the Renminbi conversion value of overseas returns
• Overseas policy risk and changing regulatory environmental requirements may increase enterprise costs and operating difficulties

What to watch

• Actual speed of implementation of Non-Financial A-Share Enterprise Overseas Revenue Share and achievement of 2030 targets
• Trend of change in overseas gross margins across industries, especially relative relationship with domestic gross margins
• Import growth rates and market share of Chinese products in three target markets: Europe, ASEAN, Africa
• Actual implementation and capacity release of Chinese investment (China+1) to major target countries (e.g., EU, India, ASEAN nations)
• Impact of global commodity prices, exchange rates, and supply chain conditions on overseas gross margins
• Actual impact of international trade friction and geopolitical conflicts on Chinese enterprises' overseas operations
• Performance of overseas orders and capacity utilization of key industry leaders (BYD, Dongfang Electric, Longi, etc.)