Still weak
"Chinese companies have gained an outstanding position among the global top 500, but compared with countries like the United States and Japan, Chinese companies fall behind in terms of mechanisms, resource integration, innovation capability, talent nurturing, brand influence, independent intellectual property rights and core technologies, as well as capability of international operation. To catch up with world top companies, Chinese companies still have a long way to go," Li said.
Reviewing the Fortune Global 500 lists in the past 10 years, the number of incorporated Chinese companies is increasing year by year. However, among the 69 companies from the Chinese mainland on the list this year, none has international brand influence.
Among the 79 Chinese companies on this year's list, most are in the sectors of power, banking, iron and steel, energy, engineering and construction, telecommunications and automobiles, which are capital-intensive and operate in natural or administrative monopoly business environments. In contrast, the number of companies from electronic and information technology sectors, which depend on technologies and innovation, is still small. There are only four from the electronic industry and three from the computer industry, with Taiwan companies contributing two to each sector. In some industries that need core technologies, such as aviation and space industry, there is no Chinese company, indicating inefficiency of technology and innovation-led companies on the Chinese mainland.
Wang Zhile, Director of Beijing New Century Academy on Transnational Corporations, said although many domestic companies have surpassed some veteran transnational corporations in business revenues, most are not real transnational corporations. Many Chinese companies on the Fortune Global 500 list lack the ability to expand into the world market and utilize global resources.
"We should not be too optimistic for the growing number of Chinese companies on the list, because some Chinese companies entered the list by acquiring transnational corporations when the U.S. economy is in recession. The real independent strength of Chinese companies should be deeply reconsidered," he said.
Take Zhejiang Geely Holding Group as an example. This year, its ranking went up to 475th from 688th last year. This shows the vigor and potential of Chinese private companies. However, an analysis of its road to global 500 finds that the company enters the list through mergers and acquisitions: In 2011, the group acquired a famous auto brand Volvo.
In recent years Chinese companies have been actively engaged in overseas mergers and acquisitions, particularly purchasing international brands on the verge of bankruptcy. Chinese companies may expand their business scales and social influence by transnational mergers and acquisitions, but it is not a reliable way for Chinese companies to be global 500.
Wang said to be bigger and stronger, Chinese companies must improve themselves and establish their own world famous brands. Only when all the Chinese companies on the global 500 list are relying on their independent brands and without the background of state-owned capital, will China establish itself in the world economy. If Chinese companies do not enhance innovation and make up for the gap with world top companies, however large their number is on the global 500 list, nothing is worth showing off.
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