If the international expansion of Japanese companies is any guide, Chinese companies still have significant potential left in the global market. That’s according to HSBC analysts. They found that for mainland China-listed companies, known as A shares, just 11.7% of their total revenue last year came from outside the country. The portion was an even lower 10.3% when looking just at the largest companies, tracked by the CSI 300 index. In contrast, 35.3% of revenue for companies in Japan’s Nikkei 225 came from overseas last year, Steven Sun, head of research at HSBC Qianhai Securities, and a team said in a report this month. Since the pandemic, Chinese companies have increasingly looked to expand abroad due to slowing growth at home. Electric cars and consumer products have stood out to investment analysts for their international potential. “We believe structural growth opportunities from consumer companies’ global expansion remain underappreciated by investors, especially in EM markets,” UBS Asia Pacific equity analyst Christine Peng and a team said in a report on June 12 about the China consumer sector. Companies to watch One of their buy-rated picks is Gongniu, a Shanghai-listed company that sells electrical products such as wall sockets, switches and lighting. The company said in its annual report that last year that it set up subsidiaries in Germany and Indonesia and recruited distributors in the Middle East and South America. Gongniu’s overseas operating revenue has only accounted for 2% or less of what it makes domestically. The company did not break out overseas revenue for the first quarter, but said overall revenue grew by 14% from a year ago to 3.8 billion yuan. When compared to Japanese companies, the contribution of overseas revenue to the total for Chinese businesses is low across industries. “Although some leading companies like BYD and CATL have made concrete steps to gain global market share, with the overseas revenue contribution reaching c30%, we believe this is likely to signal a good start rather than a ceiling,” the HSBC analysts said, noting the companies’ Japanese counterparts have grown overseas revenue to more than 70% of their business. The gap remains wide when looking at other sectors, such as electrical equipment (20.4% vs 53.8%), machinery (21.6% vs 53.5%) and pharmaceuticals (9.9% vs 34.6%), HSBC’s analysis found. Here are the firm’s China “going global” stock picks, all rated buy, in each of the three categories: Anker — a Shenzhen-listed seller of power banks and chargers, which the analysts point out saw its U.S. Amazon sales surged 65% year-on-year in April. “Anker is also the only domestic third-party supplier of smartphone peripherals certified by Apple, and its management includes Google veterans with expertise in building overseas sales channels,” the HSBC report said. Zhejiang Dingli — a Shanghai-listed manufacturer of cherry pickers and other lifts. “We believe Zhejiang Dingli will benefit from strong boom lift sales growth, especially in the US market,” the HSBC report said. It added that a “positive result” from a U.S. Commerce Department anti-dumping duty review on May 1 could support Dingli’s gross profit margin. The latest review found Dingli was selling its products to the U.S. at less of a discount than previously reported , allowing the company to enjoy a separate tariff rate than its peers. Snibe — Shenzhen-listed Shenzhen New Industries Biomedical Engineering, or Snibe for short, sells clinical laboratory instruments and substances for pharmaceutical testing. “Our healthcare analyst prefers Snibe given its overseas market sales momentum, and forecasts a 29% revenue CAGR in the overseas market during 2023-26, mainly supported by reagent sales and the higher instrument installations of medium- to large-sized models,” HSBC”s report said. Potential hit from tariffs To be sure, new U.S. and EU tariffs add uncertainty to how broadly Chinese companies will be able to benefit from overseas markets. “The conversation in the U.S. has moved beyond being tough on China or worsening U.S.-China relations. I think the conversation has moved now more toward being tough on global trade or free trade,” David Chao, global market strategist, Asia Pacific (ex-Japan), at Invesco, said during a webinar Thursday. “Maybe trade between the U.S. and Asia, maybe the good old days are over, but that doesn’t mean that trade disappears,” he said, noting, for example, “we’re starting to see new trade routes between China and the Middle East.” The Association of Southeast Asian Nations, which includes Singapore and Indonesia, has in the past few years surpassed the European Union to become China’s largest trading partner by region. The U.S. remains China’s largest trading partner on a single-country basis. HSBC analysts also pointed out that China still has room to increase its overseas direct investment — the current level relative to GDP is similar to that of Japan in 2012 and Germany in 1992, the report said. Investing in local factories and subsidiaries can help boost employment in other countries. — CNBC’s Michael Bloom contributed to this report.