Article at a glance:

The cost of going global for China's high-tech companies

• Chinese high-tech and electronics companies are continuing to improve their productivity; McKinsey research shows that in most segments, private-sector Chinese companies outperform the multinationals already. Coupled with a growing focus on better-designed mass-market products and on quality, these improvements have helped Chinese technology companies grab a larger share of the domestic market, mostly through gains in the largest and fastest-growing consumer segment, the midrange one.
• But our study shows that when these companies try to export their success, they face new obstacles. Global costs—in particular, marketing, R&D, and labor costs—are substantially higher, driving down already thin profit margins.