The Breaker Times

Chinese consumer brands are using Singapore as a cultural testbed in their quest to expand globally, thanks to the city-state’s unique blend of Asian and Western cultures.

In August alone, Chinese tea brand Chagee opened three stores in Singapore. Pop Mart, a Beijing-based retailer of collectible toys, wrapped up its second annual toy show on the island late last month with over 50 artists.

While Chinese companies have long toyed with global ambitions, their latest strategy involves a concerted effort to reach Southeast Asia via Singapore.

“Singapore is a place we call it like where east meets west, right? So for Chinese companies, if they want to go overseas, I think Singapore is a nice middle ground,” said Xiaofeng Wang, principal analyst at global market research company Forrester.

Pop Mart’s executives are considering establishing an international headquarters in Singapore, Jeremy Lee, Go-to-Market Director of Southeast Asia at Pop Mart International, told CNBC on the sidelines of the Pop Toy show in late August.

“If there is anything they [Pop Mart’s executives] want to launch in Southeast Asia, anything they want to start looking at or whether it works, [Singapore] is a good testbed to start … to quickly look at whether the idea works or not, and then kind of fine tune from there,” said Lee.

Pop Mart sells its products in 30 countries via online or physical stores, according to its website. Its overseas first-half sales grew by 260% year on year to 1.35 billion yuan ($189.90 million). That helped boost overall sales growth by more than 60%, despite China’s slowing economy.

After decades of just manufacturing Western products, Chinese companies are increasingly launching their own brands.

The new generation of Chinese brands are different — they’re not trying to hide their “China identity,” said Forrester’s Wang.

Instead, the new brands are embracing their cultural identity, using homegrown characters and designs to enter overseas markets where they then stand out from the competition, she said. That “gives them a unique advantage.”

One of tea brand Chagee’s signature looks is a cup and take-away bag design that evokes elegance similar to a popular Christian Dior tote. But the company’s name and products in Chinese draw on a traditional Chinese opera. Chagee is also a shorthand version of its original name in Mandarin Chinese, pronounced “bawang chaji.”

The new directly owned Chagee stores are part of the tea brand’s revamped effort to tackle Singapore — as a “launchpad” for tapping the massive potential of the Southeast Asia region, and eventually the rest of the world, said Lu Mian, Chagee’s managing director and head of global markets operation.

“In the next 5 years, Chagee will be focusing its expansion efforts across eight countries, namely Singapore, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Japan and Korea, with the SEA nations being the priority,” Lu told CNBC.

Chagee established its Asia-Pacific headquarters in Singapore in 2023 and is expanding its Southeast Asia team, although the company did not share by how many people.

Embracing the Chinese identity has been working for some of these companies, including the smaller Chinese toy firms that joined the Pop Toy show in Singapore last month to launch exclusive toys.

For instance, a newly launched stuffed toy from Hidden Wooo — a three-year-old Chinese brand — were snapped up by holders of the $129 early bird tickets, hours before the show opened to the public on Aug. 23.

But there are also those who find it challenging to sell their wares because of cultural underpinnings, despite Singapore’s mix of Chinese, English and Southeast Asian cultures

Hangzhou-based Dodo Sugar, which attended the Pop Toy show, said it can be difficult to convey the concept behind their products to an international audience since the designs are often rooted in Chinese culture or stories.

The company still has plans to expand to Singapore and Thailand via local partnerships to set up stores in shopping malls, while attending more events like the Pop Toy Show to promote their toys.

Xiamen-based HeyCiao, which assists Chinese firms with business operations, including online sales, told CNBC that while the Chinese market focuses on “cute” styles, the more diverse Singapore market embraces cool and alternative designs.

Besides some aesthetic challenges, Chinese firms have also encountered business strategy and operational issues in Singapore.

Earlier this year, Chagee had to end a five-year effort to enter the market with a local franchise partner. Now the company is focused on directly owned stores.

Chinese companies also need to pivot from, for example, WeChat, to YouTube and Facebook, said Pop Mart’s Lee.

“We know that in China, some of their ecosystems will be quite closed … They will work within China, but it may not work outside … it’s a whole different set of apps altogether.”

Pop Mart said it was expanding its e-commerce presence via platforms such Shopee, Lazada and Tiktok Shop.

The ByteDance-owned TikTok platform is going to be a “huge channel” for Pop Mart, Lee said.

TikTok Shop is also similar to its Douyin counterpart in China, creating a familiar infrastructure for Chinese companies that want to expand overseas. The video-sharing social media app has set up its Asian headquarters in Singapore. Its other headquarters are in Los Angeles.

The pressure on Chinese companies to double-down on Singapore and other overseas markets will likely only grow.

Other Chinese consumer companies are also reaching out to Singapore for global expansion. JD.com, which has been slower than its peers to expand into cross-border e-commerce, announced last week that it had enhanced shipping and delivery options to Singapore.

Forrester’s Wang believes that as China’s economic growth slows, the rate of global expansion for Chinese companies will inevitably increase, driven by the need to seek higher growth and profits in overseas markets.

—CNBC’s Evelyn Cheng contributed to this report.