Luckin Coffee, Mixue and other Chinese brands are choosing Singapore as a launch pad for global expansion amid weak demand and price wars in China.
Chinese restaurants storm Singapore, fleeing stiff competition at home
A record number of Chinese restaurants and cafes have opened in Singapore in the past year, turning the city-state into a testing ground for global expansion.
Brands like Luckin Coffee and Mixue have joined a wave of small-scale restaurants and hotpot joints seeking to break out of the oversaturated Chinese market.
“It’s incredibly difficult to operate in China right now, so many brands are choosing to go overseas,” says Josie Zhou, general manager of international operations at Nong Geng Ji.
Price wars drive emigration
The Chinese market has been gripped by deflation and price wars since the pandemic, while consumer demand remains weak.
According to Momentum Works, as of August, 85 Chinese brands had more than 400 outlets in Singapore, double the number from a year ago.
“The market here is complex, but at home it’s brutal,” says Erica Tay, an economist at Maybank China.
Singapore as a “gateway to the West”
With its cultural proximity, high incomes and brand prestige, Singapore has become an ideal springboard for Chinese companies.
“Building awareness here allows you to scale into Malaysia, Vietnam and Indonesia,” explains Joanne Jia of ChaPanda.
Even smaller chains are getting the backing of big investors, allowing them to lease prime locations.
For example, Shanghai-based Yong Fu Restaurant has invested S$10 million ($7.7 million) in opening a restaurant in Singapore, with plans to expand to London, New York and Paris.
Local businesses are sounding the alarm
However, the boom in Chinese brands is causing concern among local entrepreneurs.
Singapore Tenants United for Fairness said that small businesses cannot compete with powerful Chinese chains:
“We are not just not on the same level – we are not even in the same league.”
Food critic KF Seetoh adds that the massive influx is “eroding Singapore’s authentic culinary culture.”
Chinese brands are not going to stop
Despite the criticism, the expansion continues. Chinese companies are bringing efficiency, automation and low prices, honed in China’s cutthroat market.
For example, Chagee makes tea in 8 seconds thanks to its own machines, and Luckin Coffee is displacing Starbucks, whose share in China fell from 34% to 14%.