Singapore serves as a testbed for Chinese consumer brands aiming to penetrate the global market.

• Singapore is being utilized as a strategic launchpad by Chinese consumer brands for global expansion, taking advantage of its unique cultural blend.
• Southeast Asia is the target market for companies like Pop Mart and Chagee, who are using Singapore as a base for market testing and regional expansion.
• Xiaofeng Wang, a Forrester analyst, states that despite cultural and strategic challenges, Chinese brands are asserting their unique identities and adapting to diverse markets through customized strategies.

Singapore is being utilized as a cultural testbed by Chinese consumer brands in their pursuit of global expansion due to its unique mix of Asian and Western cultures.

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

Singapore is the focus of Chinese companies' latest strategy to expand their global reach.

Xiaofeng Wang, principal analyst at Forrester, stated that Singapore is a suitable middle ground for Chinese companies looking to expand overseas, as it is a location where East and West meet.

Pop Mart International's Go-to-Market Director for Southeast Asia, Jeremy Lee, revealed to CNBC at the Pop Toy show in late August that Pop Mart's executives are considering setting up an international headquarters in Singapore.

According to Lee, Singapore is a suitable testbed for Pop Mart's executives to launch, examine, and evaluate any ideas they have in Southeast Asia. They can quickly determine whether the idea works or not and fine-tune it from there.

Pop Mart's sales grew by more than 60% in the first half of the year, with overseas sales increasing by 260% year on year to 1.35 billion yuan ($189.90 million). Despite China's slowing economy, the company's growth was driven by its presence in 30 countries through online or physical stores.

Embracing 'China identity'

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

Forrester's Wang stated that the new generation of Chinese brands are not attempting to conceal their "China identity."

Instead of blending in with the competition, new brands are distinguishing themselves by embracing their cultural identity and using local characters and designs to enter overseas markets. This approach provides them with a unique advantage, she said.

Chagee's signature cup and take-away bag design is elegant, reminiscent of a popular Christian Dior tote. However, the company's name and products are inspired by traditional Chinese opera. Chagee is a shortened version of its original name in Mandarin Chinese, pronounced "bawang chaji."

Chagee's new directly owned stores are part of its revamped strategy to establish Singapore as a "launchpad" for expanding into Southeast Asia and beyond, according to Lu Mian, Chagee's managing director and head of global markets operation.

Lu informed CNBC that Chagee will prioritize its expansion efforts in eight countries, including Singapore, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Japan, and Korea, over the next five years.

In 2023, Changed established its Asia-Pacific headquarters in Singapore and is currently expanding its Southeast Asia team, although the company did not disclose the number of new hires.

Some Chinese toy firms have successfully launched exclusive toys at the Pop Toy show in Singapore by embracing their Chinese identity.

The three-year-old Chinese brand, Hidden Wooo, sold out its newly launched stuffed toy to early bird ticket holders for $129, hours before the show opened to the public on Aug. 23.

Despite Singapore's diverse cultural mix of Chinese, English, and Southeast Asian, some individuals struggle to sell their products due to cultural barriers.

Dodo Sugar, a Hangzhou-based company, stated that it can be challenging to communicate the essence of their products to an international audience because the designs are frequently influenced by Chinese culture or narratives.

The company intends to expand to Singapore and Thailand through local partnerships and by attending events like the Pop Toy Show to advertise their toys.

Navigating challenges

While the Chinese market favors "cute" styles, the more diverse Singapore market prefers cool and alternative designs, according to Xiamen-based HeyCiao, which assists Chinese firms with business operations, including online sales.

In addition to aesthetic challenges, Chinese companies have faced business strategy and operational difficulties in Singapore.

Currently, the company is concentrating on establishing directly owned stores instead of pursuing a local franchise partnership, as Chagee had to do earlier this year after five years of trying to enter the market.

Pop Mart's Lee stated that Chinese companies must shift from platforms like WeChat to YouTube and Facebook.

"In China, some of their ecosystems are closed, meaning they may not work outside of China. This is a different set of apps altogether."

Pop Mart announced plans to increase its online presence through platforms such as Shopee, Lazada, and Tiktok Shop.

Pop Mart will have a "huge presence" on TikTok, according to Lee.

TikTok Shop, similar to Douyin in China, provides a familiar infrastructure for Chinese companies looking to expand overseas. The video-sharing social media app has its Asian headquarters in Singapore and other locations in Los Angeles.

The demand for Chinese companies to intensify their presence in overseas markets, particularly in Singapore, is likely to increase.

Singapore has been slower to expand into cross-border e-commerce compared to its peers, but other Chinese consumer companies are also reaching out to Singapore for global expansion. Last week, it was announced that the company had enhanced its shipping and delivery options to Singapore.

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, according to Forrester's Wang.

—CNBC's Evelyn Cheng contributed to this report.