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Editorials

Corporate check

(China Daily)
Updated: 2010-07-10 06:50
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As the world's third largest economy it is no surprise that China boasts 54 of this year's Fortune Global 500 companies in terms of revenue, with three of them being in the top 10.

But while enjoying their rapid rise among global peers, Chinese enterprises should not mistake their current superiority in size as their long-term strength to drive sustainable growth.

The stronger-than-expected rebound of the mainland economy for the global financial crisis must have contributed a lot to the increase in its number of top global companies.

Related readings:
Corporate check 3 Chinese firms break Fortune 500's top 10
Corporate check PetroChina takes top spot on FT 500 list

Given that the Chinese economy is set to expand further and efforts are on to merge and consolidate State-owned enterprises, it is fairly likely that domestic companies will account for an even larger share of the top 500 global business giants in coming years.

The size of the Chinese business giants is impressive enough now, but their competitiveness based on their abilities to innovate and serve consumers' needs is not.

The entry of Huawei Technologies into the list for the first time is cause for optimism. It shows that a private company has finally grown into one of China's biggest businesses by overcoming fierce market competition at home and abroad.

In contrast, most other mainland companies on the list thrived largely on monopoly rather than market-oriented competitiveness.

The State ownership of these Chinese business giants is not necessarily an obstacle to their sustainable growth if they can embrace, and not kill, market competition.

But if they take their monopoly for granted and regard size as strength, there is little chance for them to grow into truly great companies that the rise of an economic power usually requires.

(China Daily 07/10/2010 page5)

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