Many Chinese food and beverage (F&B) chains are viewing Singapore as a gateway to the Western market, using the city-state to gauge consumer demand and test their ability to operate beyond China.
In February 2024, Singapore and China signed a visa-free agreement, boosting tourism and dining activity. Chinese hotpot giant Haidilao, for instance, welcomed many Chinese visitors to its branches in Singapore over the Lunar New Year. Since beginning its international expansion 12 years ago with an outlet in Clarke Quay, Haidilao now operates 12 restaurants in Singapore.
This is part of a larger trend, as Chinese F&B companies—offering everything from Sichuan hotpot to bubble tea—have rapidly expanded across Southeast Asia and even into North America and Europe. The drive for international growth is partially due to market saturation in China, where nearly 3.2 million new F&B businesses were registered in 2023.
Overseas Expansion and Workforce Growth
As Chinese F&B brands push into foreign markets, they are facing both opportunities and challenges. Lin Tan, founder of PayInOne, a company specializing in payroll services for Chinese firms, reported that overseas hiring by Chinese companies has grown by more than 200% annually over the past three years. The demand for talent is rising, with businesses focused on building supply chains, sourcing ingredients, and refining operations.
However, logistical hurdles remain, including the development of robust supply chains and overcoming localisation challenges, which are vital for sustainable international growth.
F&B Chains in Southeast Asia
Haidilao’s success is echoed by other Chinese brands making their mark abroad. Tai Er, known for its poached fish with pickled vegetables, has expanded to Singapore, Malaysia, Thailand, and Indonesia, while Zhangliang Malatang operates 63 stores across 15 countries. Yang’s Braised Chicken Rice, with over 100 outlets in more than 10 countries, has also made a name for itself internationally.
Mixue, China’s largest bubble tea chain, opened its first overseas store in Hanoi in 2018 and has since expanded to 11 countries with over 4,000 stores. Other tea brands like Heytea, Shuyi Tealicious, and Chabaidao have followed suit, setting up shop in locations across Southeast Asia, North America, and Europe.
Even Luckin Coffee, once embroiled in scandal, is part of the wave. Since shifting to a franchise model, it opened its first overseas store in Singapore in 2023, rapidly expanding to 37 outlets by mid-2024.
Franchising Fuels Growth
To accelerate international expansion, many Chinese F&B companies are embracing franchising as a key strategy. Lin from PayInOne explains that most brands start with Southeast Asia due to lower costs and ease of management, gradually expanding into Europe, North America, and beyond. Franchisees, often overseas Chinese entrepreneurs, play a crucial role in selecting store locations and overseeing operations.
Zhangliang Malatang, for instance, saw significant franchise interest after launching international opportunities in 2019, especially in the US, Southeast Asia, and Europe. After a downturn due to the pandemic, the brand is receiving about 100 inquiries per month, with franchisees attracted by the fast-growing Southeast Asian market.
Singapore as a Testing Ground
Singapore’s mature F&B market and strong economy make it an ideal testing ground for Chinese brands eyeing Western expansion. Luckin Coffee opened 32 outlets in Singapore within a year, using the market to refine its international strategy. Tea brand Chagee also views Singapore as a critical launchpad for expanding into the rest of ASEAN, with plans to open its Asia-Pacific headquarters in the city-state.
Tai Er’s initial success in Singapore led to further expansion across Southeast Asia and eventually to the US by 2023. Coffee and bubble tea brands, which are easier to standardize, have expanded more quickly than chain restaurants, which require time to adapt to local markets.
Localisation and Supply Chain Challenges
While Chinese F&B companies have made headway internationally, they face several challenges, especially in supply chain development and localisation. Establishing reliable local supply chains or importing ingredients from China is still a hurdle. For example, Zhangliang Malatang had to introduce step-by-step guides for Singaporean customers unfamiliar with its dining concept, while Tai Er adjusted its service model in North America to align with local customs.
Establishing local supply chains, importing key ingredients, and maintaining consistency in flavor are essential for these brands. They often import non-perishable items from China while sourcing fresh ingredients locally to preserve authenticity.
Managing Overseas Operations
Operating multiple overseas locations comes with its own set of management challenges. Limited oversight and communication across geographically dispersed stores make it difficult to maintain consistency.
An overseas manager of a Chinese restaurant chain noted that while Chinese companies initially believed they had an advantage in standardization and operational efficiency, they quickly realized that overseas markets required different approaches. Local regulations and food safety standards can vary significantly from those in China.
In conclusion, Chinese F&B brands have made significant strides in international markets, but their long-term success will depend on their ability to adapt to local markets while maintaining their core identity. Localisation will be key as they continue to grow globally.
