Four new firms make Fortune 500
By Liang Yu (China Business Weekly)
Updated: 2004-07-19 10:33

Their excitement is mainly linked with the unveiling of the Fortune 500, an annual list of the world's 500 leading firms based on their previous year's turnover.

If a firm is lucky enough to get a place on the list it means, to a large extent, that they have joined an exclusive global club, a much sought after target for many Chinese companies whose growth mirrors that of the national economy.

People pass by a big advertisement of the logo of Shanghai Automotive Industry Corp. The company was included in the Fortune Global 500 list recently. [newsphoto]

But entry to the list may only result in tougher challenges for Chinese companies, which are expected to not only stay on the list, according to experts and analysts, but are expected to remain as strong players in the global business community.

Chinese presence

Fortune, one of the world's largest business magazines, published its 2004 Fortune Global 500 list last week.

It shows that US-based retailer Wal-Mart still occupies the top spot with its US$263 billion revenue in 2003, the third year that the US giant has taken the coveted title. Following Wal-Mart is BP, with a sales volume of US$232.5 billion, which has overtaken its rival Exxon Mobil to grab second place. The latter reported a total turnover of US$222.8 billion.

US-based companies occupy half of the top 10 slots as, apart from Wal-Mart and Exxon Mobil, three other blockbuster businesses of the US General Motors, Ford and General Electric respectively rank fifth, sixth and ninth on the list.

The remainder of the top 10 positions are occupied by Royal Dutch/Shell (No 4), Daimler-Chrysler (No 7), Toyota (No 8) and Total (No 10).

Apart from those traditional famous global businesses on the Fortune 500 list, what is also noteworthy is the debut of four Chinese companies.

The four newcomers include the Beijing-based State Grid Corporation of China, Shanghai Baosteel Group, Shanghai Automotive Industry Corp (SAIC) and Hong Kong-based Hutchison Whampoa.

The new entries have helped bring the total number of Chinese firms on the list to 16, compared with just three 10 years ago.

Chinese companies now on the list include Sinopec, China National Petroleum, China Insurance, China Mobile, Industrial and Commercial Bank of China (ICBC), China Telecom, Sinochem Corp and Taiwan-based Cathay Life Insurance.

Among the Chinese mainland firms, State Grid ranks the highest at 46th on the list with a sales revenue of US$58.3 billion last year, SAIC had a revenue of US$11.7 billion, which places it on the lowest position 461st for a Chinese firm.

The last 50 enterprises on the Fortune 500 list chalked up an average revenue of US$10.8 billion, indicating an entry bottom line for their appearance among the elite group of big companies.

Given such demanding requirements on the firms' business performance, it seems the companies who have entered the Fortune 500 list all feel this is a reason to be cheerful.

"Joining the group of the global top 500 firms has been a long-cherished wish for generations of SAIC staff," said Hu Maoyuan, president of SAIC.

He was echoed by Meng Haibiao, a spokesman for Baosteel, who said that entry to the list shows the headway Baosteel has made in sharpening its global competitive edge, and also signals China's position as an important steel-making nation, he said.

"It's good news for us because it proves that China can develop big manufacturing enterprises that are globally competitive," said Chen Zhaozhong, a senior industry analyst at Shanghai Municipal Economic Commission (SMEC).

He was referring to the debut of Chinese firms such as Baosteel and SAIC on the Fortune 500 list. Chinese entries had previously been dominated by companies in the tertiary sector, such as major State-owned banks or firms in State-controlled sectors such as energy and chemicals.

Challenges ahead

But experts and analysts caution that entry to the Fortune 500 list does not mean everything, although such a reputation can be a good intangible asset for the enterprise and help raise brand awareness.

"My advice for the Chinese enterprises is that appearing on the list is only an honour of the past... they should be clearly aware that their future should be built upon sustainable growth," said Xie Kang, director of the Multinational Business Research Centre under the Shanghai Academy of Social Sciences (SASS).

Saying he believed in the existence of such a "Fortune 500 Complex" among many Chinese companies, Xie predicted that 30 to 40 Chinese enterprises might appear on the Fortune 500 in the next five to 10 years.

With the development of China's market economy, domestic private companies would have an equal chances to show up on the Fortune 500 list in the near future, he said.

"The list means they (Chinese enterprises) are regarded as big companies, but big companies have to face global competition," said Jonathan R. Woetzel, director and general manager of the PRC Corporate Finance unit under McKinsey & Company's China operations.

"The real challenge for them is how to stay on that list," said Woetzel.

Given the experiences of many movers and shakers on the list the number of Japanese companies on the list has, for example, dropped from 149 to 82 over the past 10 years Chinese enterprises should always try to strike a balance between operation expansion and value creation, he said.

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