China's Top Businesses Boost Revenue, Profit-Making Capacity

Chinese business have been growing at a brisk pace despite the global economic downturn, with the country's 500 largest firms earning nearly half the operating revenue as their U.S. counterparts and surpassing them in terms of profit-making capacity.

According to the China Enterprise Confederation in a forum in Hefei, Anhui Province on Saturday, the nation's top 500 businesses achieved a combined 27.6 trillion yuan in operating revenue last year, up 6.2 percent from 2008. The sum amounts to US$4.05 trillion, and is around 41.5 percent of the operating revenue of the 500 biggest firms in the U.S., up from 34 percent in the previous year.

The narrowing gap is partly due to the fact that the operating revenue of the U.S. companies plunged 8.7 percent to $9.76 trillion last year. The operating profit of China's top 500 firms accounted for 17.5 percent of that of the world's 500 biggest companies, up 2.6 points from a year earlier.

China's biggest firms recorded $220.2 billion in profit last year, compared to $390.6 billion for their U.S. counterparts. But China's ratio of profit to sales reached 5.4 percent, outpacing the U.S. with around 4 percent, meaning China has pulled ahead in profit-making capability. This is mainly because Chinese firms continued to expand quickly last year thanks to the government's massive pump-priming measures, whereas U.S. companies saw their sales plummet amid the global slowdown.

China's Sinopec, a state-run petrochemical company, ranked first in terms of operating revenue with $204.4 billion, or half of the $408.2 billion by the biggest U.S. retailer, Wal-Mart. The second largest firm was State Grid Corporation of China, followed by PetroChina, China Mobile, and Industrial and Commercial Bank of China, the world's largest bank by market capitalization.

All the top 10 companies in China are state-owned and engaged in the petrochemicals, banking, railroad or mobile communications industries. Concerns are mounting in China over the high proportion of state-run businesses among the top 500 firms and the fact that despite their huge size, Chinese multinationals have gained little world recognition.