Not long ago, the Fortune Global 500 list was released.

Amid a period of profound change, this list has transcended its original purpose to become a litmus test of nations’ ability to withstand risks.

This year, a total of 145 Chinese companies made the list, marking the fourth consecutive year that China has surpassed the United States (124 companies) in terms of the number of entries, ranking first in the world.

This demonstrates the resilience of China’s economy and the vitality of Chinese enterprises.

As China’s largest economy, Guangdong had 17 companies on the list, ranking second nationwide behind only Beijing.

With a once-in-a-century pandemic coinciding with a once-in-a-century transformation, and unexpected factors delivering severe shocks, what has enabled Guangdong to remain at the forefront?

The "Midterm Exam" for Foreign Trade

Where Does the Resilience of China’s Largest Province Come From?

In the first half of 2022, China’s foreign trade delivered an impressive performance. The total value of imports and exports reached 19.8 trillion yuan, a year-on-year increase of 9.4%.

Of this, the total value of exports was 11.4 trillion yuan, a year-on-year increase of 13.2%.

Exports from Shanghai, Beijing, and other regions remained sluggish due to the pandemic.

However, the three major provinces of Guangdong, Jiangsu, and Zhejiang remained robust, accounting for half of China’s total export volume.

Guangdong, in particular.

Although it was also hit by the pandemic in February and March, it ultimately withstood the test:

Despite factors such as a high base of comparison and disruptions in maritime transport, it still maintained a relatively high growth rate of 7.3% and was the only province in the country with total exports exceeding 2 trillion yuan.

Guangdong has once again demonstrated its strength.

A train runs fast because of its locomotive.

It is precisely because of a group of powerful leading trade enterprises that Guangdong has been able to solidify its position as a major trading province.

Guangzhou Construction Group rose from 460th place last year to 360th this year; its subsidiary, Jinbo Group, is a household name in the national steel trade sector. Zhengwei Group, which focuses on new materials industries such as copper and other non-ferrous metals, has made the list for 10 consecutive years.

In terms of the structure of traded goods, in the first half of the year, Guangdong exported 1.66 trillion yuan worth of mechanical and electrical products, accounting for 67.4% of total exports; exports of labor-intensive products amounted to 0.4 trillion yuan, accounting for only 16.3%.

Behind the strong overseas sales of “Guangdong Smart Manufacturing” lies the province’s continuous advancement toward the mid-to-high end of the industrial value chain.

Take Zhengwei Group as an example—

The company has evolved from producing ordinary copper raw materials to manufacturing specialty cables used in aerospace launch sites, high-end copper foil for the electronics industry, lithium batteries, and foldable phones, as well as nano-copper wires for semiconductor packaging—significantly enhancing its added value and competitiveness.

By focusing on core technologies and major application breakthroughs, Chinese enterprises are determined to blaze a trail toward overcoming “chokepoint” challenges.

From the ever-changing rankings

Observing the Shift from Old to New Growth Drivers in China’s Economy

Compared to 2021, Guangdong has three new companies on the list this year, two have dropped off, and the total number has increased by one.

The new entrants are BYD, SF Express, and the state-owned enterprise China Electronics Information Industry Group, which recently relocated from Beijing.

Those that dropped off the list are Evergrande and Snowflake.

In the first half of this year, BYD certainly stole the show.

On April 3, BYD announced it would cease production of gasoline-powered vehicles, becoming the world’s first traditional automaker to fully transition to electric vehicles.

On June 10, BYD’s market capitalization surpassed that of many state-owned giants such as Bank of China and Sinopec, reaching the trillion-yuan milestone.

This Chinese company, founded less than 30 years ago, has surpassed century-old luxury giants such as Mercedes-Benz, BMW, and Audi in one fell swoop. Its entry into the Fortune Global 500 now serves as a grand crowning achievement for this remarkable journey.

SF Express has also made its debut on the Fortune Global 500 list.

This new distinction has elevated SF Express to a new level, allowing it to truly compete on the same stage as global giants UPS, FedEx, and DHL.

As the king of private express delivery, SF Express’s key to standing out lies in its differentiated competitive strategy.

Taking 2021 data as an example, China’s express delivery industry generated annual revenue of 1.04 trillion yuan, an 18% year-over-year increase, while SF Express’s revenue growth reached a staggering 34.5%, far exceeding the industry average.

In the air cargo sector, SF Express is the undisputed leader—with a fleet of 68 owned cargo aircraft, covering 53 domestic hubs and 35 international and regional hubs, operating a total of 111 routes globally and 57,800 flights.

Amid the broader trend of accelerating the development of a “unified national market,” the logistics industry is entering a new phase of growth.

China Electronics Corporation (CEC) has simply moved to a new location to continue its success.

On December 25 of last year, CEC’s headquarters officially relocated to Shenzhen.

The relocation of a central state-owned enterprise’s headquarters brings not only tax revenue but, more importantly, the powerful resources and technology behind it.

Public records show that CEC owns 26 second-tier enterprises and 15 listed companies, including semiconductor firms such as Lanchi Technology, Zhenhua Technology, and Jingmen Semiconductor.

As a frontier of China’s electronics and information technology industry, Shenzhen holds a leading position in chip design, boasting star enterprises such as Huawei HiSilicon, ZTE Microelectronics, and Goodix Technology. However, it lacks competitiveness in the critical areas of chip manufacturing, packaging, and testing.

CEC’s full-industry-chain advantages in the chip sector align perfectly with the shortcomings that Shenzhen urgently needs to address.

The driving force of central state-owned enterprises is of extraordinary significance.

It is foreseeable that the number of Fortune 500 companies in Beijing will continue to decline in the future, but this is not necessarily a bad thing.

Just like China Electronics, an increasing number of giant SOEs will relocate to various regions against the backdrop of Beijing’s “relocation of non-capital functions,” taking up the banner of integrating key industrial chains.

In 2021, seven central SOEs have already relocated their headquarters out of Beijing.

Deep cooperation between state-owned and private enterprises will fundamentally transform the economic landscape across the country.

Meanwhile, the flaws of Evergrande and Snowflake’s “high-leverage development model” have become apparent; affected by the chain reaction of their “financial meltdowns,” they have fallen off the list.

Both once received widespread acclaim, but the euphoria of success and victory gradually blurred the line between corporate innovation and regulatory red lines. Unable to balance business growth with risk, they ultimately plummeted off a cliff.

Private enterprises are a vital force driving economic progress; while “big and strong” is certainly commendable, “small and beautiful” is also a valid choice.

Restoring corporate values centered on integrity and sound development requires the collective effort of society as a whole.

Big but Not Strong

How far are Chinese enterprises from world-class status?

Judging by the selection criteria, the Fortune Global 500 list is relatively straightforward: aside from ranking by revenue, the only metric displayed is profit.

The 145 Chinese companies on the list have an average profit of approximately $4.1 billion, whereas the average profit for the Fortune Global 500 has reached $6.2 billion.

The gap is even wider when compared to the United States.

The 124 U.S. companies on the list have an average profit of $10.05 billion—nearly 2.5 times that of China.

Among the top 100 most profitable companies on the list, 18 are Chinese firms—which may not seem like a small number.

But if we exclude the banks from that group, how many are left?

Eleven—nearly half.

The three major banks—ICBC, CCB, and ABC—swept the top three spots in terms of profits generated by Chinese companies.

In contrast, while 40 U.S. companies made the top 100 in terms of profits, only four of them were banks; the majority were technology, telecommunications, and pharmaceutical companies.

So, how many companies on the Fortune Global 500 list are operating at a loss?

24.

Of these, 9 are Chinese companies and 4 are American companies.

Now let’s look at profit margins.

There are 14 Chinese companies in the top 100 for profit margins, including 8 banks. The remaining 6 are Tencent, TSMC, Huawei, Fubon Financial Holding, AIA, and Cathay Financial Holding.

There are 44 U.S. companies, of which only 4 are banks.

Seventy-three companies had profit margins below 1%, with 34 being Chinese firms and 16 being U.S. firms.

Chinese companies rely primarily on the banking sector to generate profits, and their overall profitability remains insufficient.

Excluding bank profits, the average profit of the other 136 Chinese companies on the list was only $2.7 billion.

Similarly, excluding bank profits, the average profit of the other 120 U.S. companies reached $9.3 billion, which is 3.4 times that of China.

Compared to developed countries, the profitability of China’s large multinational enterprises remains in its early stages.

Furthermore, we must also note that—

In 2021, China’s total expenditure on research and experimental development (R&D) reached 2.79 trillion yuan. Although this represented a year-on-year increase of 14.2%, the total amount still fell short of half that of the United States.

Moreover, as the source of vitality for innovative research, the role of enterprises is crucial.

Although Chinese enterprises’ R&D investment now accounts for 76% of the national total, their investment in basic research remains below 10%.

The extreme weakness of enterprises in basic research is a fatal flaw in China’s innovation system. This is also the key reason why China is constantly facing “chokepoints” and requires the state to organize resources to tackle these challenges specifically.

How to become multinational enterprises with stronger core competitiveness is a topic that China’s top 500 companies must urgently address.

Enterprises must not only grow in size but also in strength.

Perhaps only by discarding the belief in “quantity” and “size” and embracing the pursuit of “excellence” can Chinese enterprises become stronger and go further.

This is also something local governments need to give more thought to.