State-owned enterprises are dominant in a number of sectors that are considered strategically important to the country. But the companies have been accused of abusing their position and benefiting from preferential policies while private businesses have to play catch-up. Both revenues and profits of SOEs have seen slower growth over the years.
SOE revenues grew only 4 percent year on year in 2014 while profits were up just 3.4 percent. Data for private companies is more difficult to come by, but a look at the 2015 China Top 500 Enterprises list may shed some light on the distance between state and private companies.
Close to 60 percent of the companies on the list are SOEs. 40 percent are private. Despite the growing number of private companies on the list, they still lag behind in revenues, assets, profits, tax contributions and the number of staff.
For example, of the 500 companies on the list, revenues by SOEs account for almost 80 percent. Tax contributions, nearly 90 percent. Internationally, some of China’s largest SOEs have solidified the Going Out strategy…their names being heard in big-time mergers and acquisitions. There are 100 Chinese companies on the 2014 Fortune Global 500 list. Ninety-two of them are state-owned.