What are China's Top 500 companies' weaknesses?
China has just unveiled its Top 500 enterprises. After years of rapid development, thetotal assets of China's top 500 enterprises reached 150 trillion yuan in 2012; the operatingincome scale have been equivalent to two thirds of U.S.’s Top 500.
Company lacks capability to respond to economic slowdown
In 2013, the overall scale of China’s top 500 enterprises continues to expand, withoperating income amounting to 50 trillion yuan. This is also the first time for them to reachthe 50 trillion yuan level, and the threshold for Top 500 has been lifted to about 20 billionyuan, an increase of 13.48 percent over last year.
Despite the overall scale expansion, the growth rate has slowed down. In 2013, theoperating income of Top 500 Chinese enterprises grew by 11.41 percent, which fell sharplyby 12.22 percent. Their total profit attributed to parent companies reached 2.2 trillionyuan, up by only 3.58 percent compared with the previous year. 43 of them suffered loss, 30 more from 2012.
Deputy Director of research with China Enterprise Confederation Miao Rong pointed out: “Majority of the Top 500 companies are traditional companies in industries ofmanufacturing and processing, resources, energy, financial. They have trouble in quicklyresponding to the restructuring and upgrading and are still accustomed to the patternsunder the general rapid economic growth.”
According to reports, large enterprises in Europe and Americas have been accustomed tomaintain the scale and efficiency of growth under the general economic growth of 1 to 3percent. While most companies in China find it difficult to profit when China's economicgrowth rate is below 7 percent. This means that China's large enterprises still mainly relyon factor inputs and the rapid expansion of capacity of the market. Many companies stillhave not learned how to profit through improvement of productivity and managementunder the circumstances where the demand of the market has slowed down.
Long-term mechanism should be established
In 2013, the number of patents of Top 500 Chinese enterprises increased significantly to atotal of 332,700 patents, an increase of 28.8 percent over last year. However, in thecontext of the economic downturn, China's investment in research has kept declining.Among the Top 500, 104 companies experienced negative growth in investment inresearch.
It is learned that large companies often determine the technical standards and industrydevelopment. 80 percent of world investment in research, 70 percent of the technologicalinnovation, 60 percent of technology transfer are completed dominantly by the world's top500 enterprises.
"Among our top 500 companies, only Huawei Technologies Co., Ltd., and ZTE Corporationhave achieved R&D intensity above 10. More companies like them will provide strongsupport for innovation for Chinese economy," Miao said.
Edited and Translated by Li Xiang, People's Daily Online
Read the Chinese version: 五百强 哪儿弱, source: People's Daily
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