A booth of China's Huawei Technologies at the 32nd ISC High Performance Conference in Frankfurt, Germany, on June 19 (XINHUA)
Fortune magazine's list of the world's largest companies, the Global 500, was released on July 20. A total of 115 Chinese firms were placed on the list, putting China in the second place behind the United States, which had 132 firms on the list. Meanwhile, Japan, which was in the third place, saw only 51 of its firms among the Global 500.
It is encouraging that the number of Chinese firms on the list has been increasing for 14 years in a row, but this has also given rise to some critical voices on the matter. For example, critics have pointed out that some Chinese firms on the list are government-supported and that some of the companies mainly rely on energy resource development but are not technologically strong. Others have called attention to the fact that a number of those companies were included on the list due to mergers and acquisitions.
In fact, most of the companies on the list are their governments' "crown jewels." For instance, during the 2008 global financial crisis, General Motors filed for bankruptcy protection. Nonetheless, due to aid from the U.S. Government, the company got out of the woods and is ranked 18th on this year's list.
Some of the Chinese firms on the list are in the energy and primary resources industry, but this doesn't mean they are not technologically advanced. Foreign oil and gas companies, such as the Royal Dutch Shell Group, ExxonMobil and BP P.L.C., are also on the list.
Moreover, mergers and acquisitions are common among big firms globally. Many firms on the Global 500 have also experienced mergers and acquisitions during their development, and Chinese firms should learn more from them. The China Baowu Steel Group Corp. Ltd., which ranks 204th, is a result of the merger between Baosteel and the Wuhan Iron and Steel (Group) Corp. Furthermore, the CRRC Corp., which ranks 318th, was formed with the merger of rolling stock manufacturers China CNR Corp. and CSR Corp. Such mergers are not simply to gain size, but to attain better resource allocation throughout a wider market range.
Two of China's Internet giants, Alibaba and Tencent, were included on the list for the first time. Also, JD.com, another major Chinese e-commerce company, remained on the list after being included last year. This means that among the six largest Internet firms in the world, half are from China, with the other half from the United States. All the three Internet giants from China are privately owned and on the frontier of the Internet industry, proving that some comments regarding the Chinese firms on the list are not accurate or fair.
Privately owned Chinese firms, especially Internet firms representing technological innovation and development trends, are filling more places on the Global 500. This indicates that they are increasingly serving as engines for China's economic growth. China's Huawei Technologies ranks 83rd on this year's list, a huge jump from last year's 129th place. Heavy input in research and development contributed to Huawei's achievements. In 2016 the company spent $11 billion in research and development, ranking first in China and eighth in the world. The number of patents Huawei applied for in recent years is also among the top in the world.
The criterion of Fortune's list of Global 500 is revenue, but the evaluation of the firms on this list should not merely be based on their capacity to make profit. As China's presence grows on the Global 500, the world should recognize not only its growing economic power, but also its development level, especially achievements in innovation and the development of its private economy.
The author is Deputy Director of the International Market Research Institute of Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, and this article was first published in Global Times
Copyedited by Bryan Michael Galvan
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