Fortune magazine ranks the global top 500 businesses every year. In 2005, China Enterprises Association and China Entrepreneurs Association published the Chinese-edition Report on Chinese Enterprises Development for the first time. The total business revenue of the Chinese top 500 enterprises is more than 6% of the Chinese domestic GDP; it constitutes the principal part of current Chinese National Economy. However, there still exist great gap between Chinese top 500 businesses and the World top 500 businesses. More significantly, there are many profound challenges for the Chinese companies in business operation efficiency, investment structure, globalization and their abilities to compete.
Firstly, although China top 500 businesses are expanding their scales continuously, they are still smaller than the World top 500 businesses', and the production efficiency is quite low. In 2001, the average capital scale and the average business revenue were only 6.5% and 5.3% of World top 500 businesses', and the business income, profits and assets per employee are the 12.9%, 29.6% and 15.9% of World top 500 businesses' respectively. (table 1)
Secondly, the Chinese top 500 have great gap with the global 500 in terms of creativities Among the Chinese top companies, the motivation system for technology innovation hadn't set up yet; and the Chinese enterprises invest very little into the technique innovation. From the proportion of R&D expenditure in business revenue we could see that, most of world top 500 businesses exceeded 10%, but only 3.8% for China top 500 businesses. As a result that, Chinese enterprises lack core technologies, which restrict their ability to upgrade products and generate additional value.
Thirdly, there have great gap in the aspect of internationalization level. Most of the Chinese big enterprises took part in the international market by export, but there are few enterprises did businesses overseas directly, and obtain the global sale channel. In other words, there is almost no one enterprise can accord with the organization structure and business strategy of cross-country enterprises in China currently.
Finally, in China top 500 businesses, 60% is state-owned businesses, the proportion of their business revenue, profits, assets and number of employees are over 80% respectively (table 2). The biggest 11 enterprises in China (State Grid, Sinopec Group, CNPC, ICBC, Bank of China, China Mobile, Sinochem Corporation, China Telecom, COFCO, China Construction Bank, Agricultural Bank of China) also included in the Fortune World top 500, are all state-owned businesses. These top Chinese state owned companies are under the government protection and operate in monopolized business. Moreover, four big banks that had substantial ill creditor's rights are included here; their ability and physical strength are suspectable. Actually, although the state- owned enterprises have a vast scale, their capitals and production efficiencies are far inferior to other ownership type enterprises. Contrarily, there had no non-state-owned enterprises ranked in the front yet.
Chinese enterprises are endeavoring to ascend into the World top 500 and compete with global companies. To achieve this goal, there are a lot of challenges for the Chinese companies to face: building company and renovating the structure, breaking the monopoly by state-owned enterprises, endowing non-state-owned enterprises with equal competition environment, to name a few.
Table 1 the comparison between China top 500 and World top 500
|
China (a) |
World(b) |
a/b |
Average Asset |
US$ 6.29 billion |
US$ 97.3 billion |
6.50% |
Average business revenue |
US$ 1.48 billion |
US$ 28.0 billion |
5.30% |
Average Profit |
US$ 73.9 million |
US$ 0.61 billion |
12.10% |
asset (per employee) |
US$161,708.00 |
US$1,017,740.00 |
15.90% |
business revenue (per employee) |
US$37,930.00 |
US$293,000.00 |
12.90% |
profit (per employee) |
US$1,896.00 |
US$6,400.00 |
29.60% |
Source: Report on Chinese Enterprises Development ， Fortune magazine
Table 2 the form of China top 500 businesses ownership type (%)
ownership type |
enterprises |
business revenue |
total profits |
total assets |
total employees |
state-owned & state-holding stock |
59.8 |
81.9 |
82.4 |
90.9 |
88.8 |
collective |
4.4 |
2.6 |
2.4 |
0.5 |
1.1 |
private |
3.8 |
1.4 |
2.1 |
0.2 |
0.8 |
joint-stock |
0.2 |
0.1 |
0.1 |
0 |
0.1 |
Co.,Ltd. |
12.4 |
5.1 |
5.4 |
1.5 |
4.6 |
joint-stock Co.,Ltd |
13.4 |
6.1 |
5.2 |
6.6 |
4.1 |
investment by Hong Kong 、 Macao and Taiwan |
0.8 |
0.2 |
0.1 |
0 |
0.1 |
foreign investment |
5 |
2.5 |
2.3 |
0.3 |
0.5 |
Source: Report on Chinese Enterprises Development |
