How can Chinese enterprises become "big, strong, and enduring"?

Billion-dollar enterprises are of great significance to China’s economy. He Zhiyi, Chief Expert at Tsinghua University Global Industry Research Institute and Professor at Peking University, analyzes in the heavyweight annual book “The Billion-Dollar Code” that first, they are a key entry point to solving the dilemma of “big but not strong.” China already has a large number of “Fortune 500” (actually “Top 500”) companies, but some rely on resource or policy dividends, and still lag behind top international companies in innovation investment and brand influence. Our research on century-old leading companies shows that among 652 global leading enterprises, 33% are century-old companies. The average market value, revenue, profit, net assets, return on assets, and sales profit margin of these century-old companies are all higher than the overall averages of these 652 leading enterprises.

This provides a reference for how Chinese companies can become “big, strong, and long-lasting.” Systematic study of the growth paths, innovation models, and cyclical resilience of billion-dollar enterprises can help us identify which companies truly possess the “genes of global competitiveness” and which need reform and optimization.

Second, they are strategic support for building a modern industrial system. A modern industrial system requires leading companies to drive it. In strategic emerging industries such as pharmaceuticals and information and communication technology (ICT), American billion-dollar companies have formed a closed loop of “R&D—production—global markets” driven by “technology + capital.” In contrast, Chinese billion-dollar companies still have “breakpoints” in key technological links. Studying the industrial chain layout of these billion-dollar companies can precisely identify bottleneck areas, providing data support for policy assistance and resource allocation.

Third, they are “safety anchors” to respond to global changes. Currently, the global industrial chain is accelerating restructuring, with some countries attempting to use “small courtyards and high walls” to curb China’s industrial upgrading. As the “ballast” of industrial security, the risk resistance of billion-dollar companies directly relates to national economic security. Therefore, it is necessary to promote more billion-dollar companies to adopt “long-term thinking,” upgrading in R&D investment, global deployment, and governance structures, so these companies can truly become “century-old enterprises.”

Since China’s reform and opening up 47 years ago, the country has built the most complete industrial system in the world. In the future, to move from a “big manufacturing country” to a “strong manufacturing country,” it must rely on a group of world-class leading enterprises. They are not only benchmarks of economic data but also the “business cards” for China’s participation in global industrial governance and innovation. This is the significance of our ongoing research on billion-dollar enterprises—using data to outline pathways, insights to guide directions, ultimately making more Chinese billion-dollar companies the “fixed stars” in the global industrial landscape.

(This article is an excerpt; for the full content, see Zhenghe Island’s annual new book “The Billion-Dollar Code.”)