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BEIJING Some Chinese consumer brands are looking for growth overseas, in markets like the U.S. and Southeast Asia.

Take Miniso, a Guangdong-based seller of toys and household products. Sometimes called Chinas Muji, Miniso opened a flagship store in New York Citys SoHo in February.

The stores gross merchandise value a measure of sales over time is clocking around $500,000 a month, with $1 million a month likely by December, founder and CEO Jack Ye told CNBC in late June.

More importantly, he said that for directly operated stores in the United States, Minisos gross profit margin is well above 50%.

If we can gain a firm foothold here and create a good business, we will have no problem in the U.S. overall, Ye said in Mandarin, according to a CNBC translation. His goal is to become the first $10 and under retailer worldwide.

Miniso stores began popping up in mainland China nearly 10 years ago, with overseas expansion beginning in 2015 in Singapore. As of March, the company said 37% of its 5,113 stores were overseas.

Faster growth outside China

Like many businesses, Miniso saw sales drop during the pandemic. More than two-thirds of its revenue still comes from China. But in the last several months, data showed a relatively rapid pickup internationally versus domestically, a result of the varying effects of the pandemic.

In the nine months ended March 31, the company said, its China revenue grew by 11% year on year to 5.91 billion yuan, versus 48% growth overseas to 1.86 billion yuan.

Chinas retail sales have lagged ever since the pandemic began in 2020. A slump in the housing market hasnt helped. Locals inclination to save, rather than spend or invest, has climbed to its highest in 20 years, according to Peoples Bank of China surveys.

Chinese companies expanding into overseas markets will be a major trend going forward, said Charlie Chen, head of consumer research at China Renaissance. China has actually entered a relatively wealthy stage with a relatively high per capita GDP.

He pointed out that for products like air conditioners, penetration among rural households was 73.8% in 2020 and even higher at 149.6% in urban areas. China Renaissance expects those penetration rates will increase steadily in the next few years.

There is very little incremental volume or incremental demand that can be created in China in a short period of time, Chen said. For these air conditioner, home appliance companies, where they can get more revenue, its overseas.

Miniso opened its first flagship store in New York Citys SoHo in February 2022.

Miniso

In Southeast Asia, air conditioners have a household penetration rate of 15%, according to the International Energy Agency.

Home appliance companies Midea, Hisense and Haier Smart Home have pressed into markets outside China over the last several years. Haier even acquired General Electrics appliance unit for $5.4 billion in 2016. Hisenses goal is that by 2025, overseas markets will generate half of its total revenue.

Those companies are seeing strong growth overseas, if not faster than in China.

Definitely if [Chinese companies] want to get into overseas markets, [they] need to build their brand, need to fight with existing competitors, Chen said. The cost will not be low. Initially they would not be profitable. But they are investing.

If Chinese businesses are able to build their brand overseas, they can compete with lower selling prices since they own or work directly with factories in China. That has helped companies like Shein become an international e-commerce giant.