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The Chinese company CNPC appeared in the first place of the Global 500 rankings. Is that a thing worth cheering up or a matter needing careful consideration?
At the end of May, a piece of news from Great Britain “cheered” the Chinese up – China National Petroleum Corporation (CNPC) was ranked No. 1 in the list of Global 500 Enterprises made by the Financial Times, which was the first time of Chinese companies taking this place.
FT’s Global 500 survey was based on the stock price. CNPC, which was ranked No. 2 last year, climbed to the first place with the market value of 329.3 billion US dollars, 13 billion US dollars larger than the runner-up Exxon Mobil. Microsoft was in the third place of this list, followed by another Chinese enterprise – Industrial and Commercial Bank of China (ICBC), whose market value reached 246.4 billion US dollars.
Different Standards of Ranking
Presently there are four magazines or newspapers making the rankings of the global enterprises. They are Fortune, Forbes and Business Week from the USA and Financial Times from Great Britain. The standards of the four media are different from each other.
The Fortune magazine’s rankings are based on the income. The Business Week and Financial Times take the market value as the main standard. The standard of the Forbes is the most complicated with the comprehensive consideration of sales, profits, total assets and market value.
In addition, there are differences in the scope of where the companies come from. The Global 500 of the Forbes doesn’t include the domestic companies in the USA. The Business Week only chooses enterprises from the developed countries and it has another ranking especially for the developing countries like China. The Fortune and the Financial Times include all the companies.
Though the standards are different, the rankings of the four magazines and newspapers are still authoritative. The companies that appear in the lists certainly have their reputations and strengths.
The Financial Times’ Global 500 is quite influential with its 47 years’ history. Therefore, CNPC’s No. 1 position is something worth cheering up.
Far from the No. 1
CNPC’s stock price increased by 1.87% or 0.24 yuan closed at 13.1 yuan per share on May 24. From the beginning of this year CNPC’s share price increased by 30%. On May 30, CNPC’s market value reached 336.4 billion US dollars, higher than Exxon Mobil’s 335.87 billion US dollars. That’s why CNPC could take the first place of the Financial Times’ Global 500. But that’s not a thing that we should be proud of.
A company’s strength doesn’t only reflect in the market value. Take the oil companies for example. The major standards to review a company’s strength are the company’s size, profitability and the amount of resources it owns. Exxon Mobil, which was founded more than 100 years ago, is the one of Top 4 oil companies with Shell, BP and Total. According to its 2008 financial report, Exxon Mobil’s profit of 45.22 billion US dollars was the largest among all the companies. In comparison, CNPC’s profit in that year was 114.431 billion yuan or 16.67 billion US dollars, only comprising of one third of Exxon Mobil’s. Meanwhile, Exxon Mobil’s reserve of oil and gas is also incomparable for CNPC – it has refineries in every part of the world. CNPC, which was founded in 1978 and went public in 2004, can not compete with Exxon Mobil in company’s scale, profitability, amount of resources and global refineries distribution.
If listing the 50 most profitable oil companies in the world, the gap could be easily seen. CNPC is ranked No. 5 in the list. However, CNPC recruits 1.67 million employees, which is the largest number among all the oil companies. Therefore, the proftit per capita is at the lowest point.
In addition, CNPC has the eighth largest amount of oil and gas reserve, taking only one tenth of the champion – Saudi Arabian Oil Company.
The market value is always changeable. Everyone knows the variability of the stock price, which is influenced not only by the performances of listed companies, but also by the political and economical environment. The market value depends on the stock price. In November 2007, CNPC went public in the yuan-denominated A-share market in November 2007. On the first trading day the company’s stock price closed at 43.96 yuan and the market value in the A-share market was more than seven trillion yuan. In addition to the market value in the HKD-denominated in which CNPC went public in 2004, the Chinese oil giant’s market value exceeded Exxon Mobil. However, after a while, the stock price of CNPC kept decreasing. On March 26, 2009, the share price closed at 15.83 yuan and the market value decreased to 453.1 billion US dollars, which forced CNPC to give the first place to Exxon Mobil. Nobody can ensure that Exxon Mobil’s market will exceed CNPC’s one day.
CNPC, as a state-owned company, has been under the protection of the Chinese government since it went public. In recent years, the international oil price never stayed stable. China, as a large oil consumer, has half of its oil consumption rely on the import. The price of the product oil can not be too high otherwise the price inversion may appear. Therefore, CNPC, and another Chinese oil giant Sinopec, asked for the subsidies from the government every year. In 2007 the government gave CNPC the subsidies of 5 billion yuan (USD 732.42 million). According to CNPC’s financial report in the first quarter of 2010, the company received another 15.7-billion-yuan subsidy from the government in 2009. It is reported that CNPC is asking for the subsidy again. Ironically, such a company keeps increasing its employees’ salaries. In the first quarter of 2010 the employees’ salaries were 14.89 billion yuan (USD 2.18 billion), with the increase of 1.084 billion yuan (USD 158.8 million). Jiang Jiemin, board chairman of CNPC said: “The 1-billion-yuan increase of salaries is rather small compared with our sales amount reaching one trillion yuan.”
Right now, the international financial crisis launched by the American sub-prime debt crisis is still hurting the global economy. It is uncertain of which challenges are CNPC confronted with. Though Chinese government have already taken some measures and gained positive results. The influence from the international market is still there. Therefore, CNPC’s first position is just a mark, not a milestone.
No Changes Happened to CNPC
This is the first time that a Chinese enterprise was ranked No. 1 in the Global 500. The Chinese people should be proud of it. However, according to a review made by a portal in China, about 128,027 netizens felt unhappy about CNPC’s “championship” while only 4,927 people said that it was a good thing.
Is that strange? But after reading the following materials, maybe you can understand the seem-to-be unreasonable feelings of Chinese people.
The oil price may be criticized by the Chinese ordinary people as much as the house price. The product oil price never varied to the international oil price. CNPC and Sinopec, which monopolizes the Chinese market, have grabbed the pricing rights firmly. Many people have complained that the oil price, but the insiders from CNPC said that the oil price in China is nearly the same with the American. Some netizens teased: “The American standard is used when comparing the oil prices. Chinese characteristics prevails when comparing the national income!”
Last year CNPC redecorated its headquarter building in Beijing and was reported to spend 60 million yuan (USD 8.79 million) in a light in the hall. Soon an insider from CNPC said that the cost of the light is “only 6 million yuan (USD 879 thousand)”. “The cost of a light even equals the price of a house,” reviewed the netizens. CNPC’s extravagance was severely criticized.
Another thing has to be mentioned. In 2007, CNPC went public in the A-share market. The initial public offering price was 48.6 yuan. However, the share price quickly fell to 10 yuan, which disappointed the stock investors very much.
Apart from overblown stock price, the dividend of CNPC also dissatisfied the investors in the A-share market. After the news that CNPC got the No. 1 was spread, some people said: “It is none of my business!”
According to the report, CNPC distributes dividends twice each year. The total amount of dividends reached 305.5 billion yuan (USD 44.8 billion) since its initial public offering. However, most of the huge dividends were taken by the China Petroleum Group Corporation, which takes 88.21% shares of CNPC, the foreign shareholders and senior executives of CNPC who have the executive stock option. The investors in the A-share market, who made the most contributions to CNPC’s financing, received the smallest return.
At the end of 2007, the dividend per share of CNPC was 1.5 yuan. That means that it will take at least 100 years for the investors to recover their cost.
When CNPC went public in the USA in 2005, the total financing was only 2.9 billion US dollars. But the dividends in the four years reached 11.9 billion US dollars. The unfair dividend distribution once again earned CNPC the criticism from the public.
The state-owned companies should turn in part of its profits to the government for the social development. However, the most profitable companies in China – ICBC, China Mobile and CNPC – saw the total post-tax profits of 300 billion yuan (USD 43.9 billion) in 2008. However, the three companies only turned in 20 billion yuan (USD 2.93 billion), most of which returned to the companies in the form of subsidies and so on.
If a state-owned company doesn’t think of the people, how does it live up to the title of “state-owned”?
Notable is the fact that all the Chinese companies getting into the Financial Time’s Global 500 are the state-owned companies, which could somewhat reflect the less developed private sector in China. With the backup from the country, these state-owned companies have no worries about the capital flow, financing channels and so on. Therefore, the No. 1 position of CNPC is nothing to be proud of.
At the end of May, a piece of news from Great Britain “cheered” the Chinese up – China National Petroleum Corporation (CNPC) was ranked No. 1 in the list of Global 500 Enterprises made by the Financial Times, which was the first time of Chinese companies taking this place.
FT’s Global 500 survey was based on the stock price. CNPC, which was ranked No. 2 last year, climbed to the first place with the market value of 329.3 billion US dollars, 13 billion US dollars larger than the runner-up Exxon Mobil. Microsoft was in the third place of this list, followed by another Chinese enterprise – Industrial and Commercial Bank of China (ICBC), whose market value reached 246.4 billion US dollars.
Different Standards of Ranking
Presently there are four magazines or newspapers making the rankings of the global enterprises. They are Fortune, Forbes and Business Week from the USA and Financial Times from Great Britain. The standards of the four media are different from each other.
The Fortune magazine’s rankings are based on the income. The Business Week and Financial Times take the market value as the main standard. The standard of the Forbes is the most complicated with the comprehensive consideration of sales, profits, total assets and market value.
In addition, there are differences in the scope of where the companies come from. The Global 500 of the Forbes doesn’t include the domestic companies in the USA. The Business Week only chooses enterprises from the developed countries and it has another ranking especially for the developing countries like China. The Fortune and the Financial Times include all the companies.
Though the standards are different, the rankings of the four magazines and newspapers are still authoritative. The companies that appear in the lists certainly have their reputations and strengths.
The Financial Times’ Global 500 is quite influential with its 47 years’ history. Therefore, CNPC’s No. 1 position is something worth cheering up.
Far from the No. 1
CNPC’s stock price increased by 1.87% or 0.24 yuan closed at 13.1 yuan per share on May 24. From the beginning of this year CNPC’s share price increased by 30%. On May 30, CNPC’s market value reached 336.4 billion US dollars, higher than Exxon Mobil’s 335.87 billion US dollars. That’s why CNPC could take the first place of the Financial Times’ Global 500. But that’s not a thing that we should be proud of.
A company’s strength doesn’t only reflect in the market value. Take the oil companies for example. The major standards to review a company’s strength are the company’s size, profitability and the amount of resources it owns. Exxon Mobil, which was founded more than 100 years ago, is the one of Top 4 oil companies with Shell, BP and Total. According to its 2008 financial report, Exxon Mobil’s profit of 45.22 billion US dollars was the largest among all the companies. In comparison, CNPC’s profit in that year was 114.431 billion yuan or 16.67 billion US dollars, only comprising of one third of Exxon Mobil’s. Meanwhile, Exxon Mobil’s reserve of oil and gas is also incomparable for CNPC – it has refineries in every part of the world. CNPC, which was founded in 1978 and went public in 2004, can not compete with Exxon Mobil in company’s scale, profitability, amount of resources and global refineries distribution.
If listing the 50 most profitable oil companies in the world, the gap could be easily seen. CNPC is ranked No. 5 in the list. However, CNPC recruits 1.67 million employees, which is the largest number among all the oil companies. Therefore, the proftit per capita is at the lowest point.
In addition, CNPC has the eighth largest amount of oil and gas reserve, taking only one tenth of the champion – Saudi Arabian Oil Company.
The market value is always changeable. Everyone knows the variability of the stock price, which is influenced not only by the performances of listed companies, but also by the political and economical environment. The market value depends on the stock price. In November 2007, CNPC went public in the yuan-denominated A-share market in November 2007. On the first trading day the company’s stock price closed at 43.96 yuan and the market value in the A-share market was more than seven trillion yuan. In addition to the market value in the HKD-denominated in which CNPC went public in 2004, the Chinese oil giant’s market value exceeded Exxon Mobil. However, after a while, the stock price of CNPC kept decreasing. On March 26, 2009, the share price closed at 15.83 yuan and the market value decreased to 453.1 billion US dollars, which forced CNPC to give the first place to Exxon Mobil. Nobody can ensure that Exxon Mobil’s market will exceed CNPC’s one day.
CNPC, as a state-owned company, has been under the protection of the Chinese government since it went public. In recent years, the international oil price never stayed stable. China, as a large oil consumer, has half of its oil consumption rely on the import. The price of the product oil can not be too high otherwise the price inversion may appear. Therefore, CNPC, and another Chinese oil giant Sinopec, asked for the subsidies from the government every year. In 2007 the government gave CNPC the subsidies of 5 billion yuan (USD 732.42 million). According to CNPC’s financial report in the first quarter of 2010, the company received another 15.7-billion-yuan subsidy from the government in 2009. It is reported that CNPC is asking for the subsidy again. Ironically, such a company keeps increasing its employees’ salaries. In the first quarter of 2010 the employees’ salaries were 14.89 billion yuan (USD 2.18 billion), with the increase of 1.084 billion yuan (USD 158.8 million). Jiang Jiemin, board chairman of CNPC said: “The 1-billion-yuan increase of salaries is rather small compared with our sales amount reaching one trillion yuan.”
Right now, the international financial crisis launched by the American sub-prime debt crisis is still hurting the global economy. It is uncertain of which challenges are CNPC confronted with. Though Chinese government have already taken some measures and gained positive results. The influence from the international market is still there. Therefore, CNPC’s first position is just a mark, not a milestone.
No Changes Happened to CNPC
This is the first time that a Chinese enterprise was ranked No. 1 in the Global 500. The Chinese people should be proud of it. However, according to a review made by a portal in China, about 128,027 netizens felt unhappy about CNPC’s “championship” while only 4,927 people said that it was a good thing.
Is that strange? But after reading the following materials, maybe you can understand the seem-to-be unreasonable feelings of Chinese people.
The oil price may be criticized by the Chinese ordinary people as much as the house price. The product oil price never varied to the international oil price. CNPC and Sinopec, which monopolizes the Chinese market, have grabbed the pricing rights firmly. Many people have complained that the oil price, but the insiders from CNPC said that the oil price in China is nearly the same with the American. Some netizens teased: “The American standard is used when comparing the oil prices. Chinese characteristics prevails when comparing the national income!”
Last year CNPC redecorated its headquarter building in Beijing and was reported to spend 60 million yuan (USD 8.79 million) in a light in the hall. Soon an insider from CNPC said that the cost of the light is “only 6 million yuan (USD 879 thousand)”. “The cost of a light even equals the price of a house,” reviewed the netizens. CNPC’s extravagance was severely criticized.
Another thing has to be mentioned. In 2007, CNPC went public in the A-share market. The initial public offering price was 48.6 yuan. However, the share price quickly fell to 10 yuan, which disappointed the stock investors very much.
Apart from overblown stock price, the dividend of CNPC also dissatisfied the investors in the A-share market. After the news that CNPC got the No. 1 was spread, some people said: “It is none of my business!”
According to the report, CNPC distributes dividends twice each year. The total amount of dividends reached 305.5 billion yuan (USD 44.8 billion) since its initial public offering. However, most of the huge dividends were taken by the China Petroleum Group Corporation, which takes 88.21% shares of CNPC, the foreign shareholders and senior executives of CNPC who have the executive stock option. The investors in the A-share market, who made the most contributions to CNPC’s financing, received the smallest return.
At the end of 2007, the dividend per share of CNPC was 1.5 yuan. That means that it will take at least 100 years for the investors to recover their cost.
When CNPC went public in the USA in 2005, the total financing was only 2.9 billion US dollars. But the dividends in the four years reached 11.9 billion US dollars. The unfair dividend distribution once again earned CNPC the criticism from the public.
The state-owned companies should turn in part of its profits to the government for the social development. However, the most profitable companies in China – ICBC, China Mobile and CNPC – saw the total post-tax profits of 300 billion yuan (USD 43.9 billion) in 2008. However, the three companies only turned in 20 billion yuan (USD 2.93 billion), most of which returned to the companies in the form of subsidies and so on.
If a state-owned company doesn’t think of the people, how does it live up to the title of “state-owned”?
Notable is the fact that all the Chinese companies getting into the Financial Time’s Global 500 are the state-owned companies, which could somewhat reflect the less developed private sector in China. With the backup from the country, these state-owned companies have no worries about the capital flow, financing channels and so on. Therefore, the No. 1 position of CNPC is nothing to be proud of.