Traditional dishes like kung pao chicken and sweet and sour pork are making way for a new wave of Chinese cuisine in Southeast Asia, featuring Sichuan hot pot, braised chicken rice, and pickle fish soup, alongside perennial favorites like bubble tea.
In recent years, Chinese food and beverage (F&B) companies have expanded rapidly into Southeast Asia, North America, and Europe, driven partly by a saturated domestic market. Huafu Securities reports that nearly 3.19 million new F&B enterprises were registered in China in 2023, marking a 24.2% increase from the previous year.
Lin Tan, founder and CEO of PayInOne, notes that Chinese firms’ overseas hiring and payroll have surged over 200% annually in the past three years. This expansion has seen F&B companies aggressively recruit for roles in food ingredients, services, and equipment.
Despite this growth, challenges such as building robust supply chains and addressing localization issues persist. Haidilao International Holding, a Sichuan hot pot chain, has been expanding internationally since 2012, now operating 119 stores globally, with a significant presence in Southeast Asia. Other brands, like Tai Er and Zhangliang Malatang, are also making their mark, with Tai Er serving poached fish with pickled vegetables across several countries and Zhangliang Malatang operating 63 stores in 15 countries.
Competition in the F&B sector is fierce, driving companies to focus on operational efficiency, cost management, and innovation. Li Weisen, deputy general manager of Yang’s Braised Chicken Rice, highlights brand upgrades and international expansion as key strategies.
On the beverage front, Mixue, China’s largest bubble tea chain, has expanded to 11 countries with over 4,000 stores. Other tea brands, such as Heytea, Shuyi Tealicious, Chabaidao, and Chagee, are also increasing their international footprint, with Chagee recently re-entering Singapore.
Luckin Coffee, which has revived its fortunes through franchising, opened its first overseas store in Singapore in March 2023 and had 37 locations by June 2024. This market is seen as a proving ground for broader international expansion.
Chinese F&B companies are employing strategies such as franchising, market selection, and localization to enter international markets. Lin Tan observes that most companies initially target Southeast Asia due to lower costs and simpler management, before moving into more complex markets like Europe and North America.
Many brands prefer franchising and collaborating with overseas Chinese entrepreneurs for local knowledge and management. Zhangliang Malatang’s overseas director noted high interest from franchisees, with around 100 inquiries per month since early 2023.
While coffee and bubble tea chains expand rapidly due to standardization and lower supply chain demands, Chinese restaurants face more challenges in gaining widespread acceptance. Carol Liao of Boston Consulting Group suggests that these restaurants may require more time to adapt and localize.
Chinese F&B companies are adapting their menus and service models to local tastes and customs. For instance, Zhangliang Malatang provides guides for its Singaporean customers, and Tai Er has modified its service style in North America to align with local practices.
Despite the enthusiasm for expansion, challenges remain. Supply chain issues and differences in food safety regulations present hurdles, with companies needing to balance localization with maintaining the authenticity of their offerings.