It is another kind of Olympics, but a rather cheapened version. As many provinces are celebrating for the number of their entries into the list of "China's top 500 companies", a massive number of small and medium-sized enterprises (SMEs) are suffering from unprecedented difficulties in many years.
As a quick scan of the Chinese business press can tell, in the last couple of days (following the release of the list on August 30), some of the formerly lackluster agrarian provinces tend to be most excited about their local corporate heroes. Ningxia has got four. Hunan has got seven. Shaanxi has got eight. Anhui and Yunnan have each got nine. Hubei has 10.
The fact however is it is the eastern provinces that have reaped the largest number of "medals" - 10 coastal and near-coast cities claiming more than half of the tally.
Among them, the city of Beijing alone claims 94 (in terms of where the company headquarters is based), followed by Shanghai with 29; Tianjin with 26; Hangzhou with 23; Wuxi with 19; Shenzhen with 18; Guangzhou with 16; Suzhou with 13; Nanjing and Qingdao each with 10.
In total, as the trade organizations which ran the rating reported, the top 500 Chinese firms' revenue would be equivalent to some 12 percent of the world's top 500 companies, while their total assets would be close to 8 percent of theirs.
But the top companies' list has failed to reflect the whole picture of the economy. There is a crucial business factor that was missed out. No doubt they all have some impressive numbers to show off - especially by operating in a large country like China. But many of them have grown this big without much competition.
The top 10, for example, included five national banking and financial services, two national power suppliers, two national oil companies, and one national telecommunication operator. They are all big by the global standard. Yet they still have to prove how well they can do in the global market - through competition as well as business alliance.
Organizers of the annual rating report should ask economists to compile a competition index for them, based on the companies' exposure to both domestic and international competition. If they are monopolies, there should be a discount on their financial performance.
Or, there may be a globalization index: Companies can qualify in the top list of China only when they can generate overseas revenues. In a time of globalization, when efficiency comes mainly from integration of the best resources one can get globally, companies without global expertise can hardly generate any sense of security for a society.
In fact, out of this year's list of 500 companies, it is reported that only 39 of them can generate at least 30 percent of their revenue. While most others still depend on factors other than branding and technologies, and most importantly, on China's relatively low labor cost, for their profits.
In contrast, as it has been the case through China's reform era, the nation's most globally competitive companies are usually the ones run by non-State interests. Suppliers of many made-in-China consumer products overseas are SMEs based in obscure towns outside the well-known cities. Funded by private investors and their families, these SMEs help the Chinese economy compete in the world, while meeting the ever-expanding domestic job demand.
Ask any Chinese consumer, indeed, who does not have the experience of being slighted by industrial monopolies? Ask any Chinese small investor, who does not feel betrayed when the same monopolies have let them lose half of their investment value in less than one year? Those companies cannot expect to be treated as national celebrities just because they are large.
It is unfair to let the SMEs, as China's most competitive and creative provider of services, goods and jobs, always remain unsung heroes. Especially now, when many SMEs are suffering from a drain in working capital after more than a half year's credit tightening, any single one that has managed to keep operating deserves the society's sympathy and the government's help.
E-mail: younuo@chinadaily.com.cn
(China Daily 09/01/2008 page4)
