The Many Faces of Chinese Companies: McKinsey

Here's more from McKinsey Quarterly on China. Consultants note that that Chinese companies are actually quite complex and fit in a number of categories with respect to size, state-ownership, expansion offshore and innovation.

Author Andrew Grant says in a recent report that the first companies that come to mind to many non-Chinese are the huge, state-owned leviathans such as Petro China, electric utility State Grid Corporation of China (SGCC) and China Life Insurance.
These operate in tightly controlled, tightly regulated industrial sectors. Like battleships, they are instruments of national policy. They provide lots and lots of jobs and services and a few are starting to make plays in other countries. SGCC, for instance is help electrify the Philippines and cell phone firm China Mobile is buying its way into the Pakistani market.

As might be expected, these gargantuan entities have not been stalwarts on issues popular in the West such as corporate governance and transparency and risk and performance management. But Grant believes they are making progress especially after they deal in global markets and confront other ideas of how to do business.

A few other company types:

• Semi-hybrids that are state-owned but function more like private firms. They tend to compete head on with global multinations, Grant believes, and often make offshore acquisitions. One example is China National Chemical Corporation.
• Globalizing players. Another state-private mix, these firms got their start as original equipment makers for large foreign-owned multinationals, but are morphing into firms that can develop their own products and brand names. They get from 30 to 50 percent of revenues from overseas operations. One example: China International Marine Containers, which makes about half of all the shipping containers in the world.
• Restless adolescents. Either state or privately-owned, these teenagers are growing up fast. They haven't perfected their brands yet but will soon. They tend to operate in developing econimies in Russia, the Middle East and Southeast Asia. One example is Chery Automobile, which makes inexpensive vehicles for Second and Third World markets.
• Emerging innovators. Using unconventional business models, these small to middle-sized firms come up with new products and services.One example is ENN Group, which ran municipal gas systems but is branching into clean energy.