In 1995, Fortune magazine began to include enterprises in all industries in its rankings of the Top 500 companies. Unbeknownst to the editors at the time, many Chinese companies began to focus on the list as a future target.
At the end of 1995, Zhang Ruimin, CEO of Haier Group, commented for the first time that Haier should strive to become a Fortune500 company, and set a deadline for this goal-2006. The Fortune500 companies are ranked according to their revenues. Haier’s revenues that year were only 1/18 of what was needed to crack the list. In the next half-year, at least 30 Chinese companies would set their own timetables for a position in the Fortune500 list. It marked the beginning of what the Chinese called the “Geared for Fortune500” era.
By 1999, five Chinese companies-Sinopec, ICBC, Bank of China, Sinochem and COFCO-were included in the ranking. After that, the list saw a growing number of Chinese companies every year, 6, 9, and 22 by 2007. However, all of these companies are large state-owned enterprises (SOEs) directly under the central government, and almost of them were in the imperfect industries. That changed in 2008.
As a top sponsor of the Beijing Olympic Games, Lenovo Group also received a major boost before the event; Lenovo entered the 2008 Fortune500 ranking for the first time with US$16.78 billion in revenues, good for 499th place. Among the 26 Chinese companies on this year’s list, it is the only company not directly under the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), and the only company operating in a fully competitive industry.
As China celebrates the 30th anniversary of its reform and opening-up drive, Lenovo’s Fortune500 listing is considered a milestone in the development of Chinese companies. In fact, many Chinese companies like Lenovo are completely market-oriented, and have either reached or will soon reach the RMB100 billion (US$14.6 billion) revenue mark (the threshold for the Fortune500 list). It appears to be a sign that Chinese companies are entering a new era.
Ten years ago, that figure would have been unthinkable. Haier’s global revenues reached RMB118 billion (US$17.2 billion) in 2007. Many more non-SOEs in China are itching to get there. In 2007, Huawei reported revenue of US$12.56 billion. Given that its CAGR has been as high as 47% in recent years, Huawei is on track to make the list. Gome, Sunning, and Shagang Group are not far behind. Private companies like Sany Group and Vanke also have ambitious plans to become members of the “club”.
Growth means expansion. In one sense, larger scale means more influence, higher status and more attention. The RMB100 billion means a solid footing on the world stage, and a great leap forward in competitiveness.
But how can these companies become stronger after they grow bigger? More and more companies are realizing that admission to the Fortune500 club is not so much a final destination, but a frustrating turning point, since there are many difficulties and a longer journey ahead.
