Nation has overtaken US in number of companies on Fortune Global 500 list

Chinese corporations are rising rapidly in the global economy, with China overtaking the United States for the first time in the number of companies ranked on the Fortune Global 500 list.

The list, released on July 22, includes 129 Chinese enterprises, compared with 121 for the US.

Chinese businesses have not only grown in scale, but their technological prowess and improving balance sheets are reshaping the global business landscape, according to experts.

The emergence of large companies has been one pillar driving the country toward a sustainable growth path, and this has put China well ahead of other emerging economies, they said.

"As a matter of fact, China reaching a parity with the US on big enterprises indicates the torrents of mergers and acquisition activities aiming to forge globally influential conglomerates are starting to pay off," said Jiang Qingyun, a business professor at the School of Management at Fudan University. "It's a reflection of the country's economic strength."

A McKinsey Global Institute study confirmed such momentum by surveying the growth patterns of 71 emerging economies. China is at the top of the seven economies that have achieved GDP per capita growth of 3.5 percent and more annually for 50 years.

The study cited examples like e-commerce emporium Alibaba Group, which has been helping smaller Chinese companies expand exports by providing guarantees to importers, which is a proven track for sustainable development.

Chinese companies also excel in innovation. Chinese technological powerhouses are making strides. Huawei moved up to 61 from last year's 72. Among the 10 companies that have the biggest jumps in rankings, six come from China, including tech titans Alibaba Group, which was up 118 spots to 182, as well as Tencent, which moved up 94 places to 237.

"History has showed how companies in the so-called new economy realm have injected growth opportunities in the US," said Zhuo Fumin, chairman of Vstar Capital.

During a venture capital-themed forum held by Fudan University, Zhuo said the fostering of Chinese companies in the digital area, such as providing better financing channels like the STAR Market at the Shanghai Stock Exchange, is bound to catapult them to the forefront of the next wave of economic growth.

This performance matches what other indicators suggest. The latest Global Innovation Index: Energizing the World With Innovation, published on Wednesday, has identified China as a progressive innovator.

The index, a collaboration between Cornell University, graduate business school INSEAD and the World Intellectual Property Organization, develops a global innovative ranking based on 129 economies' 80 indicators, from traditional measurements like research and development investment and international patent and trademark applications to newer indicators including mobile-phone app creation and high-tech exports.

According to Bruno Lanvin, the executive director of Global Indices at INSEAD, China broke into the top 20 of the index last year and continued to make progress in the area of quality of innovation, where it remains a strong leader among middle-income countries and "is important in the longer run".

He said China maintained its first place in quality of innovation among middle-income economies for the seventh consecutive year, improving its performance in all innovation quality metrics, and ranked third in the quality of universities.

"Based on such data, it is likely that the number of Chinese tech companies in the Fortune Global 500 will increase, especially in sectors of the 'new economy' (like platforms and artificial intelligence) in which access to large data sets is a strategic advantage," he said.

"Innovation is crucial for China, since it can help the country's economy overcome the 'middle income trap', a situation in which economic growth slows down as an emerging market reaches middle income," Panos Mourdoukoutas, an economics professor at LIU Post, a private university in New York, wrote in a Forbes column published on Wednesday.

"Although Chinese corporations are beginning to match their American counterparts in size and innovation, they have yet to develop a matching profitability clout in the world economy," he said.

For instance, the combined revenue of Chinese companies accounted for 25.6 percent of the Global 500 total, trailing that of US companies' 28.8 percent.

The average profit of the 129 Chinese companies on this year's list reached $3.5 billion, lower than the list's average of $4.3 billion. But it improved from $3.1 billion for 111 Chinese mainland and Hong Kong companies on last year's list.

For the same groups of mainland companies, the average return on equity, a key indicator of business strength, was 9.9 percent on this year's list, compared with 8.9 percent for last year's. The average return on sales also improved, from 5.1 percent to 5.3 percent.

"That is a fact to be expected," said Jiang, the business professor at Fudan University. "Chinese companies are relatively smaller in profitability, but they are growing at a much faster pace."(Source: China Daily)