Chinese brands are bringing their brutal F&B wars to S’pore

Imported competition is causing local pressure

Walk through any Singapore mall today, and something about the atmosphere has quietly changed. The bubble tea shop is from Chengdu. The hotpot place is backed by a 700-outlet chain you’ve never heard of. The coffee queue is for Luckin, not Starbucks.

Chinese F&B brands are suddenly everywhere, and they are expanding rapidly. Molly Tea, for instance, arrived less than two months ago and has already opened its second store.

This isn’t a coincidence, but part of a larger phenomenon—and understanding why requires looking at what’s happening inside China first.

The price wars back in mainland China

In 2024, three million food businesses closed in China.

The cause wasn’t a single recession or policy shock, but something more structural: a market so competitive that it began consuming itself.

Economists call it involution (neijuan), a cycle of excessive internal competition where companies fight harder for the same or shrinking demand. Instead of expanding the market, everyone competes on price, driving margins down until survival, not growth, becomes the goal.

In F&B, this dynamic shows up most clearly in price undercutting. When Luckin already pushed coffee to RMB¥9.9 (S$2) lattes, newer entrants like Lucky Cup went even lower, selling RMB¥6.6 (S$0.90) coffees. The logic wasn’t to build premium positioning, but to win attention and volume in an overcrowded market where differentiation had collapsed into price.

Lucky Cup, backed by tea and ice cream giant Mixue, scaled rapidly on this model, becoming China’s fourth-largest coffee chain with over 10,000 stores across 300+ cities, despite not even entering first-tier markets like Beijing or Shanghai.

The same dynamic shows up in electric vehicles. In China’s increasingly crowded EV market, BYD has been actively cutting prices to defend its share against intensifying competition. The result is a sector-wide squeeze on profitability: despite record sales volumes, BYD has faced sustained downward pressure on margins, culminating in its first annual profit decline in four years by March 2026.

Even BYD’s chairman Wang Chuanfu has acknowledged that the industry has reached a “boiling point,” where competition is no longer translating into proportional gains. In this environment, sales growth alone no longer guarantees sustainable profits—companies are effectively trading margin for volume just to maintain position in an oversupplied market.

China’s F&B market saw over 1 million businesses shut in just the first half of 2024, and that’s a 70% increase from 2023. With the home market saturated, the obvious move was outward beyond one of the most (if not the most) competitive domestic markets.

And increasingly, Singapore emerged as a consistent destination.

Why Singapore?

Singapore is not just a market for Chinese brands but a legitimacy stamp for these businesses. If they can make their businesses work in Singapore, they can succeed anywhere in Asia.

The city-state has the highest per-capita GDP in the world in terms of purchasing power parity (PPP) and a food culture that is both demanding and well-documented, as seen from being the first Southeast Asian city to receive a Michelin Guide. Reviews travel, queues get photographed, and openings make regional news.

A brand that earns its place here is perceived as having cleared a meaningful bar.

Traditionally a bridge between Eastern and Western cultures, Singapore has also become an attractive gateway for expansion, with its 6.1 million predominantly Chinese population.

As executives at several Chinese firms noted in interviews, the city-state is seen as “wealthy and fashionable”—a place where simply having a presence carries branding value, even beyond immediate sales potential.

The executives are not shy about revealing the larger ambitions Singapore has for their brands. ChaPanda’s Singapore manager told Inside Retail Asia:  “If we can build up our brand in Singapore, the brand awareness can go to Malaysia and Vietnam, even Indonesia.”

This sentiment is echoed by Luckin’s CEO Guo Jinyi, who shared that Singapore serves as a “critical testing ground” for building the brand, refining operational systems, and understanding overseas business models. The city-state serves as Luckin’s launchpad into other Southeast Asian countries.

There are also precedents of Chinese brands using Singapore as a stepping stone toward more global expansion. Tea brand Tai Er, for instance, leveraged its Singapore operations as part of its regional push before eventually entering the US market by 2023.

The pattern is consistent across many Chinese brands that went global. Singapore is not the destination. It’s the launchpad, a stamp of legitimacy that makes the next ten markets easier to enter.

Losses that don’t matter

This reframes everything about how these brands operate here, including the rents they’re willing to pay.

Consider the scale some of these chains are operating at. Pang Pang, the claypot crab restaurant at Bugis, has over 600 outlets in China and sells 50 million pots a year. Xiao Yu Hao at Raffles Place—known for its suan cai yu—runs 800 outlets back home. Xita Lao Tai Tai at Bugis+, a charcoal clay stove BBQ chain, operates 600 outlets and is named China’s number one BBQ chain. Yeah Gelato in Tampines has 168 outlets in China.

These brands draw on lean business models honed in China’s intensely competitive market and apply them to operations in Singapore to withstand high costs. Many rely on vertically integrated supply chains, where companies control multiple stages of production in-house—a sharp contrast to many Western rivals, which tend to depend on outsourced suppliers.

Since 2021, Luckin has been building more of its production capabilities. Its low-value consumables, such as packaging materials and straws, cost the company just RMB¥210 million (S$39 million) across its entire 30,000-store network. This translates to roughly S$1,307.64 per store per year, or about S$3.58 per store per day.

When a brand of this scale opens in Singapore, the individual outlet’s profit-and-loss is almost beside the point. If you view the 81 stores here in proportion to the over 30,000 stores that Luckin Coffee has in China, the Singapore stores are a marketing expense—a flagship that generates press coverage, attracts franchise interest from regional partners, and signals to investors that the brand is global.

This is why they can outbid local tenants on rent without flinching.

Andy Hoon, chairman of Bosses Network, a local business networking group representing SME and retail operators, described the dynamic: if a Singaporean tenant offers S$36 to S$38 per square foot when the market expectation is S$30 to S$40, a Chinese brand might offer S$45—above what even the landlord anticipated.

Industry observers echo this shift. Ethan Hsu, head of retail at Knight Frank, noted that large-scale Chinese investment has contributed to rising rents in high-traffic locations, while TungLok Group CEO Andrew Tjioe added that some brands are less driven by immediate profitability than by securing overseas presence and building global brand visibility.

Luckin’s financials are a great example of this business strategy. In financial year 2024, Luckin’s Singapore operations reported losses of RMB¥47 million (S$8.8 million). But in the same year, Luckin generated over RMB¥34.5 billion (S$6.4 billion) in total revenue, with an operating profit of approximately RMB¥3.5 to 3.9 billion driven overwhelmingly by its China business.

Yet, it has been expanding by around 30 stores every year here since 2023. 

Against that scale, Singapore’s losses are effectively marginal and absorbed without much consequence by China’s much bigger operations. Singapore is not treated like a profit centre but a line item in a longer-term international expansion strategy.

So what happens when the strategy stops working?

The model has a vulnerability that doesn’t show up until later: it assumes the China business stays strong enough to keep subsidising overseas losses.

Haidilao is a key example. The hotpot chain opened its first Singapore outlet at Clarke Quay in 2012, making it its first international outlet outside mainland China. Following its success, Haidilao expanded to more than 20 outlets across Singapore at its peak.

Then the rationalisation began. The Clarke Quay flagship closed in August 2025, following earlier shutdowns at Downtown East and Bedok Mall.

A Haidilao spokesperson cited labour costs, outlet locations, and rental pressures as reasons for closing underperforming stores, as the chain moved to optimise operational efficiency. The closures highlight a familiar constraint: when overseas expansion is no longer easily justified to public markets, consolidation tends to follow.

Unlike Haidilao, most of the newer brands entering Singapore aren’t publicly listed—meaning they don’t yet have shareholders demanding quarterly results. Many are venture capital or private equity-backed, operating on deep pockets with capital that is explicitly patient. But patient capital still has expectations.

If a brand cannot demonstrate a credible path to profitability in Singapore within two to three years, investor expectations begin to shift. Sustaining prime locations while keeping prices low ultimately depends on continued financial backing—either from a strong parent company or successive funding rounds—that can support the broader supply chain and scale these brands rely

The broader Singapore F&B picture adds pressure. Some 3,047 businesses shut in 2024—the highest figure in nearly two decades. The casualties so far are mostly local: Ka-Soh, an 85-year-old heritage restaurant, and the Privé Group, after 18 years of operation. 

Knight Frank has described the environment as “a very Darwinian retail landscape,” noting that rising competition from Chinese entrants has intensified pressure on incumbents. Unlike many local players, these new entrants have largely been insulated from closures, underpinned by scale advantages that domestic operators struggle to match.

But insulation is not immunity.

The question is not whether Chinese brands will keep entering Singapore. As of Aug 2025, some 85 Chinese F&B brands were operating around 405 outlets in Singapore, more than double the 32 brands and 184 outlets recorded just a year earlier. 

There’s no doubt that they will keep coming. The more pressing question is what happens when these brands have been in Singapore long enough to be judged on standalone performance, and whether the China-based ecosystems quietly subsidising their expansion can continue absorbing pressure of their own.

• Read other articles we’ve written on Singaporean businesses here.