When China’s companies sought to conquer global markets more than a decade ago, the attempt did not end well.?

In the early 2010s, a clutch of Chinese billionaires launched an unparalleled, debt-fuelled acquisition spree, buying up high-profile assets across Europe, the UK and the US: from English football clubs and Hollywood studios to French resorts and even the famed Waldorf Astoria hotel in New York. After years of consistent double-digit growth in outbound investment, by 2016 China trailed only the US as the biggest global investor.

But this golden age did not last. A combination of rising US angst over China, and Beijing’s own concerns over the biggest ever outflow of Chinese money, sparked a stark change in sentiment.?

The value of mergers and acquisitions activity between the US and China has since declined rapidly, hitting a 10-year low in 2024. Meanwhile, scores of trophy assets owned by Chinese corporations — including those bought up by the likes of HNA, Anbang, Dalian Wanda and Fosun — were put back up for sale, and many hitherto high-flying?executives were investigated for corruption.

Now, however, a new generation of companies from the world’s second-biggest economy, including world-beating technology manufacturers such as Tesla rival electric vehicle maker BYD, battery giant CATL and solar panel group Longi Green Energy Technology, are embarking on a new wave of global investment. And their need for sustained success is increasingly acute amid the economic shock of US President Donald Trump’s trade war and the prospect of slowing growth of consumption in China.

“It’s huge money going out,” says Shaun Rein, managing director of Shanghai-based China Market Research Group. “Chinese businesses now are far more sophisticated in their outbound investment strategies than the companies were 10 years ago. It’s not about acquiring a hotel or real estate development in the US, it’s not about getting cash out of China. There’s a focus on return on investment and a focus on brand building.”

But will this new wave of companies fare differently??The answer may depend in no small part on the thinking of Hong Kong-based lawyers helping to guide Chinese companies as they expand beyond the safety of their domestic market.

Tommy Liu, for example, a partner in the technology, media and telecoms team at law firm Hogan Lovells, works to “fully integrate with the company”. This includes actually using companies’ products and services, and trying to proactively understand the market dynamics and regulatory risks a company might come up against in new jurisdictions. Using this approach, he has helped Chinese companies develop blueprints for their international expansions — a far cry from simply offering reactive legal advice.

Liu has helped Chinese ride-hailing app DiDi, auto giant Geely and Tencent, owner of the WeChat superapp, to make sure their overseas operations are compliant across a range of potential problem areas, from ethical, social and governance regulations to supply chain requirements, data protection, labour conditions and licensing.

As geopolitical tensions rise between China and the US, Liu is also starting to provide more risk assessment and analysis services to Chinese businesses.?“The ‘first stage’ lawyer is giving legal advice, the next stage is [that] you are giving commercial solutions,” he says. “We’re now at a stage where lawyers have to embrace the client’s core business and understand what their business is really about?.?.?.?this is particularly true for Chinese clients.”

Shaun Wu, head of law firm Paul Hastings’ litigation department in Hong Kong and China, is also thinking innovatively to help Chinese companies reduce risk as they expand overseas.

Like Liu, he says he has set out to proactively anticipate risks and identify solutions, rather than responding reactively to crises.

Wu’s approach involves running a “health check” by bringing together external experts such as technology specialists and forensic accountants. They search for potential points of vulnerability that could affect a company operating under a new regulatory framework.?

Wu often presents the results directly to a company’s board of directors to explain where such weaknesses might lie. “It doesn’t mean that your expansion is going to fail, but it has to withstand scrutiny. So let’s deal with these problems proactively as part of your strategy,” he explains. “It’s better you do that with your lawyers than in front of the Securities and Exchange Commission in the US.”

According to Climate Energy Finance, an Australian research group, since the start of 2023 Chinese companies have committed tens of billions of dollars in outbound cleantech investments, for example.

But there have been significant mis-steps in the new wave of Chinese overseas investment. In Brazil, at the close of 2024, carmaker BYD fired a subcontractor working on the construction of a new factory after local labour officials said they had rescued 163 workers from “slavery-like conditions”.

The Chinese group is also facing an investigation by the European Commission over whether China provided unfair subsidies for its new electric vehicle factory in Hungary.

Chinese businesses now are far more sophisticated?.?.?.?than the companies were 10 years ago

Still, Liu believes that lessons from Chinese groups’ past failings abroad have broadly been learnt. Previously, Chinese companies targeting a foreign country would take a “helicopter” approach, sending in their own people from China and trying to operate as they did at home.

But the new generation of Chinese groups, Liu believes, is “much better equipped to expand abroad” with more foreign-educated and culturally aware executives who understand that strategies must be far more sophisticated than a decade ago.

Liu says he advises companies to try to embed themselves more deeply than during the earlier phases of outbound Chinese investment — hiring more local staff, for example, or adopting local knowledge and culture.

“For Chinese companies, only when they are willing to co-operate with local business, grow with the local people, [then] that business, that product will be long surviving,” he says.