One country grabs 60% of the world: Grabs 5,000,000,000 people, making $800 billion

Since the end of the Cold War, the corporate giants of the rich world have been the dominant force in global trade. Since 2016, one country’s publicly traded firms have quadrupled their sales in the Global South to $800 billion, and now sell more there than in developed countries. Thus, China captures 5,000,000,000 consumers, approximately 62% of the world, who live in the rest of the world, in developing countries.

Greenfield foreign direct investment by Chinese firms tripled last year to $160 billion. Much of that sum was spent building factories in countries from Malaysia to Morocco, according to an analysis in The Economist .

The expansion of Chinese business takes two forms. One is through globalized supply chains. Greenfield foreign direct investment by Chinese firms tripled in 2023 to $160 billion.

Less noticed is that Chinese firms are also targeting the 5 billion consumers living in the rest of the developing world. Since 2016, publicly traded Chinese firms have quadrupled their sales in the global south to $800 billion, and now sell more there than in rich countries. For the West, which is trying to cope with China’s rise, this offers uncomfortable lessons.

Chinese businesses are looking abroad, in part because of slowing economic growth and fierce competition at home. They are diminishing the dominance of existing multinationals everywhere from Indonesia to Nigeria. Transsion, an electronics firm, makes half of the smartphones purchased by Africans.

Mindray is the leading provider of patient monitoring systems in Latin America. Chinese manufacturers of electric vehicles (EVs) and wind turbines are expanding into the developing world, which also happens to be home to nine of TikTok’s top ten markets.

The precise shape of Chinese expansion is, however, a consequence of the policies of Western and Chinese governments. As rich countries erect trade barriers to keep out Chinese goods, including solar panels and electric vehicles, some Chinese firms are trying to avoid the restrictions by moving production to the global south. At the same time, selling to emerging markets itself has become even more attractive.

China overtakes the West in the Global South

The companies’ path has been smoothed by the Chinese government’s efforts to build diplomatic ties with the Global South, notably by facilitating $1 trillion in infrastructure investment through the Belt and Road Initiative (BRI). As the West turned inward, China and the rest of the emerging world drew closer.

At a time when globalization is under attack, it offers an important lesson for policymakers: trade can bring extraordinary benefits. Billions of lives will be improved by a wider range of cheap, innovative and green goods. Transsion’s $100 smartphones mean that some of the world’s poorest people now have all the knowledge and services the internet has to offer.

Affordable medical devices will save countless lives. Low-cost green technologies make it possible for developing countries to keep their greenhouse gas emissions under control even as they become richer and their populations grow.

Chinese firms are now on the cutting edge of electric vehicles and batteries, precisely the kind of industries rich world governments find at home. The idea that Chinese brands have no global appeal has been dispelled by companies such as Shein, a fast fashion firm.

Sales of Chinese companies in the Global South have already surpassed those of Japanese multinationals. According to current trends, they will overtake European firms and be on par with American firms by 2030.

Western multinationals have long been the main agents of cross-border trade and investment and some of the biggest beneficiaries of openness. Today, they are gaining ground in the world’s fastest growing and most populated markets. China is already reaping the benefits.