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69Chinese corporations make the Fortune Global 500 list released on the Chinese website of the magazine, the first time China overtook Japan as the second largest country for Fortune 500 enterprises only after the United States with 133. 61 of the 69 are from the mainland, 15 more than last year, and 8 from Taiwan, 1 more than last year.
I have been tracking the number of Chinese enterprises on the Fortune 500 list. This year 69 Chinese enterprises (61 from the mainland) made the list, compared with the 2 in the beginning of the 1990s, the first time China overtook Japan as the second largest country for World 500 enterprises only after the United States. It is encouraging to see a great increase in the number of Chinese enterprises among the Global 500 in the past two decades.
However, we should not be complacent. We should be aware that Chinese corporations are still lagging behind multinational companies.
First, we are behind multinational companies in terms of capacity to operate globally. In the past decades, multinational companies have implemented a strategy of integrating resources and building value chains globally. Theses companies have become more global along with the implementation of the strategy. For example, the world’s largest 100 multinational corporations registered a globalization index of 40% in 1994, and the figure rose to 60% in 2008. These multinational corporations have become global ones. Higher globalization index means stronger capacity to operate and integrate resources globally. In the era of globalization, capacity to operate and integrate resources globally is the most important part of a corporation’s competiveness. By comparison, Chinese corporations are not as much globalized. The globalization index of some of the largest corporations is under 10%. In other words, Chinese corporations largely use domestic resources and depend on the domestic market.
Second, during its transition to a global one, a multinational company should not use military forces to plunder the resources of other nations like in the times of war. Instead it should conduct win-win cooperation with nations being invested in, take social and environmental responsibilities, and operate in compliance with regulations. This is a new trend of corporate development in peace time. Compared with such global companies, Chinese ones have made great progress in taking social and environmental responsibilities, but a better job is yet to be done in compliance with regulations, which is necessary for Chinese companies to grow and expand.
When we feel encouraged by the expansion of Chinese corporations, we should realize their weakness in terms of global operation and management in compliance with regulations, and look at the increase in the number of Chinese enterprises in Fortune 500 in perspective. Our corporations should be big, but more importantly, it should be strong and lasting.
It is noteworthy that the Fortune magazine made the rankings based on corporate revenue. High revenue doesn’t mean an enterprise is strong. Actually, the English name of the ranking is “The World’s largest Corporations Fortune Global 500”, accurately reflecting the nature of the ranking. However, it was translated into the World’s Strongest Corporations Fortune 500 on the Chinese website of the magazine. The Chinese translation has misled readers by equating the revenue and strength of a company.
In fact, the English name of the list is The World’s largest Corporations Fortune Global 500 or Fortune World 500 for short, which accurately reflects the nature of the rankings. The Chinese editors have literally changed the name of the Fortune list by translating it into the World’s 500 Strongest Corporations, making negative impacts on the value of the brand. They should be grateful to Guan and Zhou for their advice to change the name back into what it should be. How could the editors refute their friendly and reasonable advice?
The Fortune 500 list helps Chinese enterprises understand multinational and global corporations. And the annual Global 500 meetings held in Shanghai in 1999 and in Shanghai in 2005 were of profound significance. Chinese enterprises have grown quickly in competition with the rest of Top 500. The Fortune magazine and its 500 list are widely respected.
Chinese companies should become stronger and bigger. However, we should avoid equating size with strength. Editors of the Fortune magazine China should present a true picture of global corporations and change the name of the list from the Strongest 500 to the Largest 500, so as to help Chinese enterprises become stronger, bigger, and more lasting.
(Author: Head of Beijing New Century Research Institute for Multinationals)
I have been tracking the number of Chinese enterprises on the Fortune 500 list. This year 69 Chinese enterprises (61 from the mainland) made the list, compared with the 2 in the beginning of the 1990s, the first time China overtook Japan as the second largest country for World 500 enterprises only after the United States. It is encouraging to see a great increase in the number of Chinese enterprises among the Global 500 in the past two decades.
However, we should not be complacent. We should be aware that Chinese corporations are still lagging behind multinational companies.
First, we are behind multinational companies in terms of capacity to operate globally. In the past decades, multinational companies have implemented a strategy of integrating resources and building value chains globally. Theses companies have become more global along with the implementation of the strategy. For example, the world’s largest 100 multinational corporations registered a globalization index of 40% in 1994, and the figure rose to 60% in 2008. These multinational corporations have become global ones. Higher globalization index means stronger capacity to operate and integrate resources globally. In the era of globalization, capacity to operate and integrate resources globally is the most important part of a corporation’s competiveness. By comparison, Chinese corporations are not as much globalized. The globalization index of some of the largest corporations is under 10%. In other words, Chinese corporations largely use domestic resources and depend on the domestic market.
Second, during its transition to a global one, a multinational company should not use military forces to plunder the resources of other nations like in the times of war. Instead it should conduct win-win cooperation with nations being invested in, take social and environmental responsibilities, and operate in compliance with regulations. This is a new trend of corporate development in peace time. Compared with such global companies, Chinese ones have made great progress in taking social and environmental responsibilities, but a better job is yet to be done in compliance with regulations, which is necessary for Chinese companies to grow and expand.
When we feel encouraged by the expansion of Chinese corporations, we should realize their weakness in terms of global operation and management in compliance with regulations, and look at the increase in the number of Chinese enterprises in Fortune 500 in perspective. Our corporations should be big, but more importantly, it should be strong and lasting.
It is noteworthy that the Fortune magazine made the rankings based on corporate revenue. High revenue doesn’t mean an enterprise is strong. Actually, the English name of the ranking is “The World’s largest Corporations Fortune Global 500”, accurately reflecting the nature of the ranking. However, it was translated into the World’s Strongest Corporations Fortune 500 on the Chinese website of the magazine. The Chinese translation has misled readers by equating the revenue and strength of a company.
In fact, the English name of the list is The World’s largest Corporations Fortune Global 500 or Fortune World 500 for short, which accurately reflects the nature of the rankings. The Chinese editors have literally changed the name of the Fortune list by translating it into the World’s 500 Strongest Corporations, making negative impacts on the value of the brand. They should be grateful to Guan and Zhou for their advice to change the name back into what it should be. How could the editors refute their friendly and reasonable advice?
The Fortune 500 list helps Chinese enterprises understand multinational and global corporations. And the annual Global 500 meetings held in Shanghai in 1999 and in Shanghai in 2005 were of profound significance. Chinese enterprises have grown quickly in competition with the rest of Top 500. The Fortune magazine and its 500 list are widely respected.
Chinese companies should become stronger and bigger. However, we should avoid equating size with strength. Editors of the Fortune magazine China should present a true picture of global corporations and change the name of the list from the Strongest 500 to the Largest 500, so as to help Chinese enterprises become stronger, bigger, and more lasting.
(Author: Head of Beijing New Century Research Institute for Multinationals)