Fortune 500 list shows rising impact of Chinese firms

By Tan Haojun Source:Global Times Published: 2017/7/25 20:13:39

Illustration: Peter C. Espina/GT

On July 20, Fortune released its list of Global 500 companies. US-based Wal-Mart ranked first for the fourth consecutive year. China's State Grid Corp and oil giant Sinopec Corp ranked second and third on the list, respectively.

Although there are many corporate rankings, it is undeniable that the Fortune Global 500 is the most influential list. Because of this, the number and ranking of Chinese enterprises in this list can really show the status, impact and global economic strength of Chinese enterprises. This year's list shows that the world influence of Chinese companies has been greatly improved.

First, since 2003, there have been more Chinese companies included on the list every year. This year, there were 10 companies listed for the first time, and the total number of enterprises reached 115, behind only the US counterparts with 132. Some observers speculate that in another three to five years, China may exceed the US as the country with the most Global 500 enterprises.

Second, private enterprises have become the new growth drivers for Chinese companies to enter the list. However, State-owned enterprises, especially the monopoly enterprises, still have advantages in terms of the number of listings and the rankings. However, we must note that private enterprises are entering the Global 500 at an unprecedented speed.

This year, there were 10 companies newly appearing on the list, mostly private enterprises, including Alibaba, Tencent and similar companies. It can be foreseen that in the coming years, more and more private enterprises from China will appear in the Global 500.

The rapid growth of private enterprises is undoubtedly more significant in terms of the improvement of China's international influence.

Since the start of this year, in face of pressure and difficulties in China's economy, some international institutions have deliberately exaggerated the problems of some Chinese enterprises. But a strong performance is the best counterattack. In the first half of this year, China recorded strong GDP growth of 6.9 percent.

Further, the increased number of Chinese enterprises - especially private ones - among the Global 500 shows the enhancement of Chinese corporate strength and the impact of China's economic restructuring. In the global market, private enterprises are gaining more resilience and flexibility, and their vitality is also an important economic indicator.

The fact that more and more private enterprises are entering the list is also evidence that the status of private enterprises in the Chinese economy continues to improve, and these companies are becoming the driver of China's economic restructuring. China is playing a decisive role in allocating resources on the market, and one symbol of this is the rise and international influence of private enterprises.

Analysts believe that with the continuous improvement and optimization of the market environment and better regulation of the market order, more private enterprises will quickly enter the Global 500. They will be an important factor in promoting the international market influence and status of Chinese enterprises.

However, although the number of enterprises in the list has been rising for 14 years, private enterprises have been steadily improving their presence, and the world influence of Chinese enterprises has been expanding, some specific problems have emerged. These problems have plagued China's economic development and business operations for many years.

First, some listed enterprises still keep losing money. Compared with internationally well-known companies such as Apple, Chinese enterprises have a long way to go in terms of core competitiveness, brand recognition and international market influence. In particular, some State-owned enterprises have high rankings, but they often lack brand recognition. That explains their defective performance. Companies should be alert to this problem.

Second, innovation capacity is still relatively weak. The list shows that among the top-ranking enterprises, a certain number of the Chinese enterprises are monopolies and resource-based enterprises, such as banks, electricity companies and energy companies. Enterprises from the US are mainly innovative enterprises, such as Apple, Google, Microsoft and so on.

Although this year Alibaba and Tencent appeared on the list, indicating that Chinese enterprises have begun to rise in terms of innovation, their underlying power is inadequate, which must be taken seriously.

Moreover, it is worrying that banks occupy the top positions on the profit list. Among the top five on the profit list, except for Apple, the rest are all Chinese commercial banks. Those four are Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China.

Since interest is the main source of the banks' income and their profits come mainly from the interest rate margin, higher profits for banks mean a greater impact on other enterprises. This also indicates that the reason why financing is difficult and expensive for many companies is because of the banks' excessive pursuit of short-term interest. This is worthy of attention.

Generally speaking, through this year's Global 500 list, we can clearly see that the world influence of Chinese enterprises is on the upswing. The most important sign of this is the rapid rise of private enterprises as well as the further consolidation and continuous improvement of the State-owned enterprises. As to the problems and contradictions, we must attach greater importance to solving them.

The author is a financial commentator.


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