Global Rise of Chinese Corporate Giants

Only a decade ago, Chinese companies accounted for barely 1% of the world’s largest companies and multinationals. Today, their share has grown by more than tenfold.

After mid-November, Alibaba again won the highest e-commerce sales day in history on China’s Singles’ Day beating last year’s record by almost 40%–hitting some $25.4 billion, Market Oracle reported.

In the United States, the 2016 combined Black Friday and Cyber Monday sales amounted to $6.5 billion, while Amazon’s 2017 Prime Day sales rose to $600 million to $1 billion range. Even combined, all of these revenues account for less than one-third of Alibaba’s Singles’ Day sales.

In one decade, Chinese companies have captured a significant chunk of global competition, thanks to Chinese infrastructure development, savings, rising middle-class–and increasingly global sales.

Since the 1980s, globalization has contributed to the rise of large emerging economies. Unlike corporate giants from advanced economies, aspiring Chinese companies have had to cope with competition that is increasingly global, capital-intensive and innovative.

From Haier and Lenovo to Huawei and Tencent–not to speak about the Chinese giants in banking and insurance, construction, utility, automotive, oil and engineering–the pioneering Chinese corporate behemoths often benefit from cost advantages that are beyond the reach of their current rivals.

Before the global crisis, advanced economies–US (16%), Europe (49%) and Japan (4%)–accounted for more than two-thirds of all outward foreign direct investment worldwide. In contrast, China’s share was barely 1%.

Today, advanced economies–US (21%), EU (32%), Japan (10%)—continue to dominate almost two thirds of total outward FDI. However, the share of China has grown more than tenfold to 13% of the total. That’s a dramatic increase in just a decade.

The same goes for the rankings of the world’s largest companies, as measured by market value.

At the eve of the global financial crisis, advanced economies–US (16%), EU (49%) and Japan (4%)–still dominated more than two thirds of the market value of the world’s 500 leading corporations. In contrast, the share of Chinese companies was barely 1%.

Barely half a decade after the global crisis and the European credit crisis, advanced economies–US (21%), EU (32%), Japan (10%)–still had almost two-thirds of the total. However, the share of Chinese companies had soared more than ten-fold (11%).

This, however, is just the beginning. As global R&D hubs broaden in China and the role of the mainland’s multinationals spreads worldwide, Chinese companies will begin to compete for global leadership–while paving way for the rise of other corporate giants from large emerging economies.