Summary of Key Points
Over the past few years, the Hong Kong Stock Market (HKSM) has become an important platform for mainland Chinese companies to pursue their internationalization dreams, with the amount of funds raised through HKSM IPOs even surpassing that of other global markets in 2025. However, many companies have mistakenly viewed HKSM listing as a shortcut to internationalization, only to encounter numerous obstacles in their actual operations: their overseas businesses have failed to grow as expected or have even declined. The article highlights that capital-based internationalization (such as listing and foreign investment) does not equate to globalization at the operational level. True internationalization requires product adaptation, systemic adjustments, long-term investment, and even necessary concessions in interests. HKSM listing merely provides access to funds and shareholders but does not address the most critical market barriers and political risks.
The Illusion of Internationalization through HKSM Listing: Busy with Capital, Yet Lacking Business Success
Many companies see HKSM listing as a passport to internationalization, with their prospectuses claiming they aim to "expand into global markets." However, the reality is quite different:
- Mixue Bingcheng: Aimed to open over 6,000 overseas stores by 2025, but actually ended the year with only 4,467 stores;
- Haitian Weiyeh: Claimed that overseas revenue would account for 15% within three years of listing; in reality, it dropped from 7% to 5%, and they even refused to disclose overseas financial data;
- Saisi: Planned to use 20% of the raised funds for overseas sales, but in 2024, its overseas revenue decreased by 15%, falling from 11.5% to 2.9%.
These companies believed that obtaining foreign investment and listing in HKSM would open up global markets, yet they overlooked the fundamental challenges: their products were not selling well, new stores were not opening, and thus revenues did not increase.
The Real Barriers to Internationalization: Money Alone Does Not Guarantee Success
Why does HKSM listing fail to solve these problems? Because internationalization is a systematic endeavor that cannot be achieved by simply throwing money at it:
1. Difficulties in Local Adaptation: Successful domestic models often do not work abroad. For example, Haitian's soy sauce is favored for its salty and savory taste in China, but in Southeast Asia and Europe, consumers prefer lighter flavors, requiring adjustments to the formula.
- Significant Differences in Business Systems: Overseas markets have different channels, supply chains, and talent requirements. High-end cosmetics, for instance, must meet local safety standards and be sold through established retail and e-commerce networks, which requires time and investment.
- Inescapable Political Risks: The international landscape is complex, and business issues can easily become political. TikTok, for example, was forced to divest in the United States due to political pressure. Chinese companies often assume that having foreign shareholders will protect them from such risks, but this is not always the case; political priorities often favor local businesses.
Success Stories: Long-Term Investment and Concessions
Not all companies have failed. Companies like CATL, SF Express, and Hengrui Medicine have made progress in internationalization, but their success did not come from HKSM listing alone. Instead, it relied on substantial investment and strategic compromises:
- CATL: Overseas revenue now accounts for 30% of its total, with higher gross margins than domestically. They achieved this by "conceding control rights in exchange for market access" by building factories overseas.
- SF Express: After acquiring Kerry Logistics, it took four years to integrate and develop an international supply chain, essentially "conceding operational rights to expand its network."
- Hengrui Medicine: Instead of building its own overseas sales team, it licensed its innovative drugs to multinational pharmaceutical companies like GSK and Merck, gaining access to their global markets in exchange for royalties.
- BeiGene: Moved its registration base from the Cayman Islands to Switzerland, becoming a Swiss company to bypass geopolitical barriers and gain success in the U.S. market.
The common thread among these successful companies is their willingness to invest over the long term and make concessions to integrate into global industries.
The Value and Limits of HKSM Listing
While HKSM listing can provide access to overseas funds and attract international investors, it does not solve all problems:
- Lack of Local Adaptation Patience: It takes time for companies to adjust their products to suit local markets.
- Gaining Global Trust: Consumers' acceptance and channel partners' willingness to cooperate depend on more than just foreign shareholders.
- Political Protection: Domestic preferences often prevail in overseas markets, which capital cannot change.
In summary, HKSM listing is a valuable tool for accessing international markets, but it is not a guarantee of success. Internationalization requires genuine commitment, adaptation, and the willingness to make sacrifices for integration into global ecosystems. Relying solely on HKSM listing as a shortcut to internationalization will only result in empty promises if companies do not make the necessary adjustments and investments.
Conclusion
HKSM listing is not a panacea for internationalization. It provides a platform for capital and access to international investors, but it does not guarantee success on its own. True internationalization involves embracing a patient and cooperative approach, adapting products and systems, and making strategic compromises. Only by doing so can companies truly establish themselves in global markets.