For the latest edition of this report, we’ve partnered with the Shenzhen Finance Institute to predict who among the nearly 3,000 companies analysed will be tomorrow's industry juggernauts.
Following the success of the 2014 and 2016 'China's next 100 global giants' reports, we've researched 2,691 privately listed companies to reveal our selected list of 100 mainland Chinese private enterprises with the potential to not only be industry leaders, but to also disrupt and evolve their industries overall.
Each company in this year’s report has experienced relatively rapid growth and supported the concept of innovated development with a sustained long term vision, all while being strategically oriented at the international level.
In determining this year’s ranking, the research team designed 11 indicators based on historical performance and potential for growth.
Using this, they developed an evaluation system that allowed the research team to identify the top 130 mainland Chinese companies. The largest 30 of these were then excluded from our ranking as the goal of this report is to predict the potential future business giants based in mainland China, not companies that are already large. Scale of business was found to detract from this as it indicates the company has already undergone sustainable development and is already an industry leader.
Thus far, our predictions have proved accurate in many cases, as several of the companies mentioned in our 2016 ‘China’s next 100 global giants’ ranking, most notably Fosun Pharma, have already risen to become industry leaders after an exceptional period of steady growth.
By the end of 2017, there were more than 27 million private enterprises operating in mainland China, with registered capital exceeding 165 trillion CNY (£19479900000000 GBP). Over the past 20 years, the mainland Chinese government has encouraged this growth through the launch of the Belt and Road Initiative; their ‘Go Global’ campaign to support mainland Chinese enterprise in their expansions overseas; and platforms like the 18th Central Committee, who encouraged private enterprises to lawfully set foot in more business sectors, while introducing non-state owned capital to participate in the reform of state-owned enterprises.
This commitment to expansion has shown major results on the world stage. Among the world’s top 500 enterprises, the number of mainland Chinese enterprises represented grew from one in 2010 to twenty eight in 2018.
Most of the companies included in our new ranking are already market leaders domestically and have begun expanding globally in recent years. 49 of these companies scored 90 or above in the overseas strategy indicator, which means that they have not only begun their expansion into the international market, but they’ve also improved their overseas operational capabilities in ways that have improved their means of facing risks and challenges in foreign markets.
Technology is a major player in getting our mainland Chinese global giants into the US stock market, with seven of the nine listed in NASDAQ or the New York Stock Exchange specialising in a field related to internet and software.
Technology reigns supreme
Of the 22 sectors represented by the 100 companies selected in our ranking, 42 of them are related to technology. Of these enterprises, 24 represent computer and telecommunications, eight internet and 10 involve software and IT.
This number has increased by 50% since our last report in 2016. With tech giants like Alibaba and Baidu propelling the use of internet dependent enterprise applications like industrial manufacturing, it is expected that the boundaries between different groups are going to fade even more. This is going to lead to a continued rise in technological private enterprise results and ultimately cause a dramatic disruption for what have historically been considered more traditional industries.
All of this plays an important role in areas such as the growth of the mainland Chinese market economy, the transformation of government functions and the transfer of the rural surplus workforce to urban areas, as well as the nation’s expansion into the international market.
When discussing growth in the mainland Chinese economy, it is essential to mention that mainland China’s private sector provides its government with an incredibly profitable return.
It is characterised by the ‘50%–60%–70%–80%–90%’ rule, which means that the private sector contributes more than 50% of taxes, more than 60% of mainland China’s GDP, more than 70% of technological innovations and more than 80% of urban employment, while representing more than 90% of the total number of enterprises in mainland China.
Therefore, these predicted global giants are estimated to have a sizable impact domestically and internationally as they set the stage for more industry leaders in the future.
Read the full report to find out who mainland China’s global giants 2018 are.