The retail landscape of Singapore is undergoing a visible transformation. In shopping malls across the city-state, the presence of Chinese food and beverage (F&B) brands is expanding rapidly, with newcomers like Molly Tea opening multiple stores within two months of arrival. This surge is not an isolated trend but a symptom of a structural crisis within the Chinese domestic market.
The Driver: Domestic ‘Involution’
The aggressive expansion into Singapore is driven by a phenomenon economists call involution (neijuan)—a cycle of excessive internal competition where companies fight for shrinking demand by slashing prices, prioritizing survival over growth. This dynamic has led to a devastating contraction in China’s F&B sector; three million food businesses closed in 2024, with over one million shutting down in the first half of that year alone, representing a 70% increase over 2023.
Price wars have become the primary tool for survival. Luckin Coffee previously pushed latte prices down to RMB¥9.9 (S$2), only to be undercut by entrants like Lucky Cup, which sells coffee for RMB¥6.6 (S$0.90). Backed by the tea and ice cream giant Mixue, Lucky Cup has scaled to become China’s fourth-largest coffee chain with over 10,000 stores across more than 300 cities.
This “boiling point” of competition, as described by BYD chairman Wang Chuanfu, extends beyond F&B. In the electric vehicle market, BYD has aggressively cut prices to defend its market share, resulting in sustained downward pressure on margins and its first annual profit decline in four years by March 2026.
Singapore as a ‘Legitimacy Stamp’
For these brands, Singapore is less a destination and more a launchpad. With the highest per-capita GDP in the world in terms of purchasing power parity (PPP) and a prestigious food culture recognized by the Michelin Guide, the city-state serves as a critical benchmark for success in Asia.
Luckin CEO Guo Jinyi has described Singapore as a “critical testing ground” for refining operational systems and understanding overseas business models. Similarly, the Singapore manager for ChaPanda noted that building brand awareness in the city-state can facilitate expansion into Malaysia, Vietnam, and Indonesia. This strategy has precedent; the tea brand Tai Er utilized its Singapore operations as a regional springboard before entering the US market by 2023.
The ‘Marketing Expense’ Business Model
The scale of these Chinese chains allows them to operate in Singapore using a financial logic that differs from local businesses. Many employ vertically integrated supply chains to lower costs. For example, Luckin’s packaging and straws cost approximately S$3.58 per store per day across its 30,000-store network. The company has further invested US$440 million in a smart roasting center in Qingdao, China.
Because of this massive domestic scale, Singaporean outlets are often treated as marketing expenses rather than profit centers. In financial year 2024, Luckin’s Singapore operations reported losses of RMB¥47 million (S$8.8 million). However, these losses were marginal compared to Luckin’s total revenue of over RMB¥34.5 billion (S$6.4 billion) and an operating profit of approximately RMB¥3.5 to 3.9 billion driven by its China business.
This financial cushioning allows Chinese brands to outbid local tenants on rent. Andy Hoon, chairman of Bosses Network, noted that while a Singaporean tenant might offer S$36 to S$38 per square foot, a Chinese brand might offer S$45. Ethan Hsu, head of retail at Knight Frank, observed that this large-scale investment has contributed to rising rents in high-traffic areas, while TungLok Group CEO Andrew Tjioe added that some brands prioritize global visibility over immediate profitability.
Local Pressure and Future Risks
The influx of subsidized competition has intensified pressure on local operators. In 2024, 3,047 businesses in Singapore shut down—the highest figure in nearly two decades. Notable casualties include the Privé Group and the 85-year-old heritage restaurant Ka-Soh. Knight Frank has characterized the current environment as a “very Darwinian retail landscape.”
However, the model of using domestic profits to subsidize overseas losses is vulnerable. Haidilao, which once expanded to over 20 outlets in Singapore, began a process of rationalization, closing its Clarke Quay flagship in August 2025 along with stores at Bedok Mall and Downtown East. A company spokesperson cited rental pressures, location, and labor costs as reasons for the closures.
As of August 2025, approximately 85 Chinese F&B brands operated around 405 outlets in Singapore, a significant jump from 32 brands and 184 outlets a year prior. While many of these newer entrants are backed by patient venture capital or private equity, they may eventually face pressure to demonstrate a credible path to standalone profitability.
The long-term sustainability of this expansion may depend on whether the China-based ecosystems can continue to absorb domestic pressure while subsidizing their international presence.