Editor's note: Since 2002, the Chinese Enterprise Guild and the Chinese Entrepreneur Association have for three successive years brought out to the public the namelist of the 500 strong enterprises in China. For the Chinese enterprise circle this is truly a great event of realistic and far-reaching significance. After a tracing study of development and changes and a comparative analysis of the superiority, problems and disparities between the 500 strong enterprises in China with those of the world, the Economic Weekly of the People's Daily puts out the article on Monday to point out the orientation for the Chinese enterprises to make efforts in future, hoping that this would offer a piece of enlightenment for the Chinese enterprises to become stronger and larger.

Disparities as compared to the 500 strong of the world

Comparing the 500 strong enterprises in China in 2004 to those of the world, the capital scope and scale of the former registers only 5.61 percent of the latter with the profit accounting for 5.22 percent. The deep-root cause of the disparity lies in the system and mechanism.

As against the 500 strong enterprises of the world, the development of large enterprises in China hasn't seen a long time, and so still a big gap. In 2004, the comparison of the 500 strong enterprises in China as against those of the world indicates that the capital scope and scale of the former occupies only 5.61 percent of the latter with the turnover to register 7.3 percent and the 5.22 percent in profit. The per capita average turnover income, average profit and average asset tell respectively only 16.23, 11.62 and 12.46 percent of the world 500 strong.

The disparity between the 500 strong in China and those of the world expresses not only in quantity but moreover in the quality, management capability and competitiveness of the enterprises.

Rough in management and unreasonable in structure

Behind the high-speed increase the Chinese economy has paid away a relatively big price of resources and environment. In 2003, the per unit GDP consumption of energy resources was 10 times that of Japan, 5 times of the USA and 3 times of Canada, and the metal consumption was 2-4 times that of the world average. And the sewage displacement for per unit GDP increase registered 4 times that of the developed countries while the solid castaway produced from per unit industry output value witnessed over 10 times.

Rough management with low effect is also a reflection of the outstanding problem in the industry structure of the Chinese economy. Among the 500 strong Chinese enterprises for 3 consecutive years from 2002 to 2004, the number of tertiary industry comes only to around 20 percent, a drastic difference with that of the 60 percent in the USA.

Fragility in abilities for technological innovation, research and development

The difference between China and the developed countries with regard to the ability in technological innovation, research and development is mainly expressed, first and foremost in short of self-innovation and creativeness, depending too much on the outside world. The telecommunication and auto industries fell one after another into a double vicious circle of "backward �C draw-in �C backward again �C draw-in again" and "inferiority �C dependence �C more dependence �C more inferiority", and the second is the lower input for research and development. In the nationwide investigation of the key enterprises the R & D input came only to 1 percent of the total sales revenue, far away from the level of 3 �C 5 percent for the R & D input as stipulated by the state and the third is inferiority in patent awareness with no enough attention paid to application and protection of it.

Low in internationalized standard

The investment ratio of the Chinese enterprises overseas occupied only 1.75 percent of the total direct foreign investment in the world in 2003. This goes unsymmetrical to China's economic status in the world. If compared to the USD 53.5 billion of foreign direct investment in China that year the scope and scale of China's overseas investment appear to be of no significance.

Generally speaking, there are three criteria for measuring the internationalization level of an enterprise in the world, i.e. the overseas sales ratio in the total sales, the overseas sales coverage of an enterprise and the transnational personnel owned by the enterprise. Among the 100 global large enterprises, the overseas sales ratio occupying 50 percent of the total sales came to over half of the number. Among the members of the boards of directors in the 500-world strong enterprises, foreigners come to over 40 percent with the high-level management consisting mostly of multinational personages. In the transnational corporations of the US, Japan and Europe the enterprise managers having overseas work experiences come respectively to 32, 19 and 47 percent. With the three indices and international advanced level to measure those of China, hardly any of the large enterprises in China can accordingly reach the corresponding standards at the same time.

Monopolized enterprises still occupy a leading position

Most of those at the forefront of the world-500 strong are the enterprises with a very great competitiveness but the first 10 enterprises of the 500-strong in China in 2004 are all monopolized ones. This indicates that the dependence inertia of the Chinese large enterprises on government support for development is still playing a role. And this is an obvious difference between the Chinese enterprises with those at the forefront of the world-500 strong enterprises that depend mainly on the world market for development.

The difference indicated is only a superficial one while the deep-root cause that entailed the disparity between the 500 strong in China and those of the world lies in the disparity of system and mechanism. Of the 500-strong in China in 2004, the state-owned enterprises and the state-shareholding companies come to a proportion of 72 percent, and of the 189 large enterprises subordinated to the central government 50 are within the rank of the 500. For these large state-owned enterprises, the modern enterprise management system is yet to be improved, while the legal form for the reform of part of the large enterprises is not yet clear enough and still the mechanism in some of the large-state-owned enterprises are unable to cater to the new situation of market competition domestic and foreign. Contained by the administrative system and policy, the acquisition and reorganization of the subordinated enterprises are relatively difficult to be implemented there and to certain extent there still exist some different barriers in the reorganization of enterprises and restructure of the assets.

By People's Daily Online