The 2018 Fortune Global 500 list has just been released and includes seven companies from Shenzhen: Ping An, Hua Wei, Amer International, China Merchants Bank,Evergrande, Tencent and Vanke. Their rankings have risen significantly compared with previous years together with how highly they're valued.
The Fortune Global 500, which is released annually, mirrors the global economic landscape. Looking at the total number of companies on the list, 120 are Chinese enterprises, ranking them second only to the companies from the United States with 126, a fact that fits with the China’s position as the world's second largest economy. For the last 15 years the number of Chinese enterprises on this list has continued to increase, indicating that momentum is gathering as they grow bigger and bigger. However, “being stronger” doesn’t necessarily come with “being bigger." There are still big gaps in large Chinese enterprises in terms of institutional mechanisms, innovation, personnel training, brand influence and internationalization, when compared with top international enterprises. Looking at two indicators (return on sales and return on net assets) that can better judge a company’s performance, the overall condition of Chinese enterprises on the list is not optimistic: their performance indicators are slightly lower than average and are going down -- a situation that must be seriously addressed.
The economist Paul Anthony Samuelson said in his famous book Economics that "In the United States, business is about enterprise", which shows the importance of enterprises to a country. The report to the 19th CPC National Congress clearly stated that "Fostering world-leading enterprises with international competitiveness” means we must train our companies to be bigger and stronger, thereby accelerating the construction of a modern economic system and promoting high-quality economy development.
We may observe China from many perspectives, and the development of enterprises is one of the indispensable factors. Some have summed up the Chinese economy over the past 40 years of reform and opening up in three main phrases: first, a big and strong state-owned economy, for example in Beijing; second, introduction of foreign capital, for example in Shanghai; third, prosperity of private economy, for example in Shenzhen. It’s just as the saying goes: “State-owned enterprises prosper in Beijing, foreign enterprises in Shanghai, private enterprises in Shenzhen.”
With its big market and fast-paced growth, it's not difficult for China to attract world-class multinational companies or cultivate world-class state-owned enterprises. However, the task of cultivating world-class local private enterprises in a short time is extremely difficult. One of the most successful and unique things achieved by the Shenzhen SEZ since its establishment 38 years ago is the independent nurturing of a number of world-class local private enterprises, and the entrepreneurial spirit has become a distinctive part of the city’s DNA. Of the seven companies on the list, except Evergrande, six are native to Shenzhen and have tremendous influence in China and a strong presence on the international stage.
The number of Fortune Global 500 companies that are based in a city can be very important, making its structure and benefits even more appealing. Among the seven Shenzhen-headquartered Fortune Global 500 companies, there are two financial companies, two real estate developers, one communications equipment manufacturer, one non-ferrous metals manufacturer and one Internet company. These all fall within the scope of modern services, high technology and strategic emerging industries, which reflects the rationality of Shenzhen's economic and industrial structure. Of those Chinese companies listed, Ping An ranks 7th, and also boasts the highest revenue among non-state-owned enterprises; Tencent, with a profit margin of more than 30%, is the most profitable enterprise. They form a microcosm of the development quality and efficiency of Shenzhen enterprises.
Instead of trees standing alone one by one, world-class companies should result from the same ecosystem. Shenzhen's urban atmosphere, business vitality, public services and innovative entrepreneurship provide a fertile space in which companies can thrive. Shenzhen takes pride in its success in striving forward amid intense market competition while turning out large world-class enterprises and numerous small enterprises that make up an innovative and competitive “echelon”. This also serves as the strongest momentum that drives it forward.
Big enterprises are the cornerstone of industrial development and can lead and drive a number of supporting industries and enterprises to form a powerful driving force for industrial progress. As early as three years ago, Shenzhen promised that it would have 8 to 10 local enterprises listed on the Fortune Global 500 by 2020, with its urban competitiveness ranking among the best in the world. To this end, in the Several Measures to Help Enterprises Enhance Competitiveness, it is clearly stated that we need to implement a plan to nurture and attract large leading enterprises and multinational companies and add a number of corporate groups with international influence and competitiveness by providing 30 million yuan as a reward when they are first included in the Fortune Global 500. A 10 million yuan reward is offered to enterprises when they are first included in the China 500. Meanwhile, we will set up access limitations on land development and utilization, focus on supporting new energy, new materials and bio-pharmaceutical sectors to provide space for strategic emerging industries, modern services and headquarters economic bases. Strong policy orientation and support means big opportunities for enterprises. At present, Shenzhen has taken the lead in enhancing the reform of the business environment, which will make it easier for enterprises to grow bigger. In this context, “Shenzhen’s strength” in the Fortune Global 500 is expected to continue to grow an indeed it is only one step away from its 2020 goal.
It should be mentioned that only a great country can foster clusters of great enterprises. All those "giant trees" among Shenzhen enterprises have grown up throughout the process of reform and opening up. In the future, the new Shenzhen enterprises joining the Fortune Global 500 will inevitably stem from the national empowerment of the all-encompassing rise of the Chinese economy and sail forth into the era of comprehensively deepening reform and opening up.