August 12, 2021. Shanghai – More than a dozen companies helmed by CEIBS alumni have made the recently-released 2021 Fortune Global 500 list. Chinese businesses also featured prominently on the annual list, with 135 companies being ranked amongst the largest companies in the world. Chinese and US companies alternated spots at the top of the list, with Walmart, State Grid, Amazon.com, China National Petroleum, Sinopec and Apple rounding out the big six.
Chinese Companies on Fortune 500 Global List
Source: Fortune Chinese Network
The impact of COVID-19 on the global economy made a big impact on this year’s list, as profits of the world’s top 500 companies fell sharply. In 2020, the total net profit of companies on the list was $1.6 trillion, a drop of 20% year-on-year (the biggest drop since 2009).
Nevertheless, aided by China’s rapid recovery from the pandemic, average profits of Chinese companies on the list were essentially unchanged from the previous year at about $3.5 billion, slightly higher than the overall Fortune 500 average of $3.3 billion. By comparison, the average profits of US companies on the list fell to $5.1 billion.
CEIBS alumni currently serve as Chairman of the Board, Chairman, Vice-Chairman, or President of 14 Fortune Global 500 companies:
China’s recovery speed and expanding global competitiveness
CEIBS Associate Professor of Strategy and International Business
China ’s import and export of goods topped 32.16 trillion RMB in 2020, an increase of 1.9% over 2019 (and a record high). In the context of the global pandemic, that level of foreign trade is beyond many ’s imagination.
In the post-COVID-19 era, China ’s role in the global supply chain has become increasingly prominent. Moreover, the country ’s contributions to controlling the pandemic have promoted the rapid recovery and steady development of Chinese companies.
The 2021 Fortune Global 500 list also indicates that the international economic situation is undergoing some profound changes.
From a macro perspective, China has retained its mid-to-high-end manufacturing and industrial supply chain advantages. However, with the gradual disappearance of the country ’s demographic dividend and rising labour costs, China’s industrial structure is now experiencing accelerated transformation and upgrading.
For Chinese companies with global aspirations, facing an ever-changing external environment requires leveraging available opportunities, cultivating internal skills, and constantly building, strengthening, and reshaping their competitive advantages. Furthermore, they must embrace technological innovation, increase R&D investment, grasp the pulse of global business and emphasis high-quality and stable development.
By shifting from scale to quality and from imitation and to innovation, more and more Chinese companies will shine on the international stage in the future.
Diversified opportunities under the pandemic
CEIBS Assistant Professor of Management
Looking at this year ’s Fortune Global 500 list, the advantages of traditional companies such as State Grid, PetroChina, and Sinopec (which have consistently ranked high on Fortune ’s annual list) remain obvious. The steady growth of enterprises in pillar industries such as energy and their global competitive advantages clearly demonstrate the strong fundamentals and strength of China ’s economy.
In particular, the oil industry has maintained a steady profit performance despite effects of the pandemic. Sinopec ’s profit fell slightly by 8.7%, while PetroChina ’s profit increased by 3%. In contrast, the profits of international oil giants have fallen by more than double digits.
The performance of Chinese companies on the list is inseparable from China ’s effective control of the outbreak and the rapid recovery of economic production. That said, the list also reflects the differentiation of leading companies in some industries.
Finance and insurance companies such as Ping An Insurance and China Life Insurance, for example, have increased their revenue and have climbed the ranking, but their profits have declined slightly. At the same time, state-owned banks such as ICBC, Bank of China and Agricultural Bank of China have achieved overall growth in the ranking, turnover and profits.
In terms of emerging industries, the development of Chinese internet businesses has kept pace with the world during the pandemic and the rankings of companies such as JD.com, Alibaba, Tencent and Lenovo have all improved significantly.
JD.com ’s profits increased by 309% in 2020, helping it jump 43 spots to 59 on Fortune ’s list, while Alibaba ’s ranking moved up 69 spots to 63. Tencent and Lenovo also made big leaps, demonstrating the global competitiveness of China ’s internet companies.
The inclusion of Midea, Haier, Xiaomi and other companies on the list further shows that China ’s traditional consumer manufacturing industry has effectively achieved industrial upgrading and digital transformation by using IoT technology.
These figures show that under the pandemic, Chinese companies have adjusted to changes in the global market and consumer behaviour, making timely transformations and seizing new growth opportunities.
Comparing the companies on the list in China and the US, it is easy to see that there are advantages for each. Most of the Chinese companies on the list are concentrated in energy, construction, finance and other industries. Although the US economy has been hit hard by the pandemic, its advantages are still concentrated in the retail and service industries represented by Wal-Mart.
Although the development of the internet in the two countries has accelerated, US companies still have greater advantages in terms of scale and operating income. Companies such as Amazon and Netflix, for example, have dedicated years to technological investment and business exploration and are now experiencing profitability.
Ultimately, in the post-pandemic era, Chinese companies can further use their advantages in the domestic and international markets to achieve technological and business model innovation and strengthen their global competitiveness.