More locally traded firms make Fortune China list
With a slew of reforms enlightening the nation’s equity market that is envisioned to fund the economy’s shift toward being innovation-driven, 366 domestically traded firms made the Fortune China 500 list this year, the highest tally on record, according to the annual rankings of China’s top 500 public firms released Monday.
The new list comes amid heightened tensions between the world’s two largest economies that have resulted in a rift in the spheres of technology, trade, industry and finance, prioritizing an indigenous approach to economic development, analysts said.
Publicly traded Chinese firms on the list booked 50.5 trillion yuan ($7.21 trillion) in combined revenues, up 11 percent from the year before. Their net profits hit 4.2 trillion yuan, an increase of over 16 percent year-on-year, per the list compiled by the Chinese version of Fortune magazine and the wealth management unit of China International Capital Corporation Limited.
To put it in perspective, China’s GDP topped 99 trillion yuan last year, meaning that the combined income of these firms exceeded half of the nation’s GDP.
The threshold for firms to climb onto this year’s list nears 17.8 billion yuan in annual revenues, up 10 percent from the previous year, read a statement on the Chinese version’s website Monday.
In a way, the new rankings still tell a similar story of the Chinese economy, with this year’s top three – Sinopec, CNPC and China State Construction Engineering Corporation – unchanged from last year. Ping An Insurance still held the fourth spot, remaining the top non state-owned firm on the list.
The 10 most money-making listed firms comprise several commercial banks, insurers, and Alibaba, China Mobile and Tencent.
The thrilling part of this year’s list sees the upward move of privately run internet giants including JD.com and Alibaba. The former holds 13th spot on this year’s ranking, up from last year’s 17. In the case of Alibaba, it moved to 18th on the list from the previous year’s 24th.
With top internet services firms gradually becoming profitable, firms on the list that fall under this category raked in 300 percent growth in net profits year-on-year, according to the statement.
A total of 39 firms either made it to this year’s ranking for the first time or made it back on the list. NASDAQ-listed e-commerce site Pinduoduo is a new addition, ranked 321 on the list. Among the noticeable new list members is Transsion, the Chinese handset maker dubbed “king of African smartphones” which trades on the NASDAQ-style STAR Market in Shanghai.
An increasing number of premium firms have opted to float on China’s domestic stock markets, buoyed by the nation’s capital market reforms that put in place a registration-based IPO system and which made the STAR Market and the ChiNext market in Shenzhen a twin engine to power the economy’s quality growth, market watchers said, expressing optimism on the economy’s outlook.
In a research note sent to the Global Times, Wang Tao, chief China economist at UBS, revealed the bank’s upward revision of China’s GDP growth forecast to 2.5 per cent for this year from 1.5 per cent earlier.
On top of that, with China-US relations dragged into conflicts on multiple fronts including technology, trade, industry and finance, the US has got extremely tough on US-listed Chinese firms, prompting secondary listings by these firms in Hong Kong or the domestic markets and also the abandoning of US IPOs by some Chinese businesses, Zhang Yansheng, chief research fellow with the China Center for International Economic Exchanges, told the Global Times Monday.
The trend is set to continue, Zhang said, expecting more locally traded firms to make the Fortune China list.
The US crackdown on Chinese firms, especially technology heavyweights, would inevitably put a strain on the affected Chinese businesses, but that can have a positive effect on the Chinese economy over a longer run in that the US technology blockade would only prompt the Chinese business community to “abandon fantasy and carve out its own way to technology prowess,” he noted.
Some of the Chinese firms on the US Entity List such as ZTE and Hikvision also found themselves on the Fortune list. ZTE saw its ranking notch down to 112 from last year’s 107 while Hikvision climbed up one notch to 183 this year.
The shift toward homegrown intellectual property to gradually wean the nation off the reliance on foreign technology components will take time, but it will pay off five to 10 years from now, Zhang said.
Performers greet tourists at the entrance of the Shanghai Disneyland theme park in east China’s Shanghai, May 11, 2020. (Xinhua/Ren Long)
