Chinese companies on the list are large but still not strong enough

0 Comment(s)Print E-mail Beijing Review, September 1, 2020
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When Fortune magazine compiled its first Global 500 list in 1995, selecting the top industrial, financial and service corporations by revenue, only one company from the Chinese mainland appeared on it. It was Bank of China, occupying the 207th spot.

Two years down the line, the number had increased to four, and in 2001, when China joined the World Trade Organization, it grew to 12.

This year, when the list was released on August 10, there were 133 Chinese companies on it, outnumbering the 121 from the United States.

Reading between the lines, it indicates Chinese brands are becoming globally renowned. Since 2008, the number of Chinese companies on the list has been growing rapidly. They outnumbered Germany, France, the UK, then Japan, and the U.S. Since the launch of the list, no other country has seen its number of companies on it increase as rapidly as China.

One reason for that is China's growing harnessing of the Internet. Besides financial and resource-based companies, Internet firms have become a new force for Chinese brands to carve out a niche in the world market. This year's list includes seven Internet-related companies, four of them from China and the rest from the U.S.

But the prime reason is the Chinese economy's steady growth since the reform and opening-up policy was implemented in 1978, followed by successive governments intensifying the policy, creating unprecedented opportunities for the development of Chinese companies. They would not have been where they are today without it.

With the expansion of economic globalization, the Chinese economy has become well integrated into the world economy and Chinese companies' engagement in global business has increased. New initiatives like the Belt and Road, the China International Import Expo, and the ongoing transformation of the southern province of Hainan into a free trade port have facilitated China's greater engagement in global trade.

However, a note of caution needs to be sounded. Though Chinese companies have now outnumbered American ones on the Global 500 list, their profitability is still less comparatively. They have an average annual profit of only $3.6 billion, while the Global 500 average is $4.1 billion. And the figure for American firms is $7 billion. This means the Chinese companies on the list are large but still not strong enough.

Therefore the new list is not just an occasion to celebrate but also to take stock and improve.

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