The Stars Of China: Companies

By Thomas Clouse

COMPANIES

AUTOMOBILES

Chery International

After years of torrid growth, China’s automobile market slowed significantly this year, with light vehicle sales up only 5% year-on-year in the first eight months, according to figures from J.D. Power. Chery International, already the most popular Chinese brand domestically, has successfully sought out growth by finding new buyers for its automobiles in other emerging economies. Chery exported more than 100,000 cars in the first eight months of the year, an increase of 88% over 2010.

FOOD AND BEVERAGE

Nestlé

International food giant Nestlé, which already operates 23 factories in China, has further strengthened its presence in the world’s most populous country through several acquisitions this year. In September the Chinese government approved Nestlé’s purchase of a 60% stake in private food company Yinlu. Nestlé has also agreed to pay $1.7 billion for a 60% stake in Chinese snack and candy maker Hsu Fu Chi.

CONSUMER GOODS

Haier

Haier, which purchased its retail franchise business from its parent company last year, saw its first-half revenues and profits rise by 68% and 79%, respectively. The big gains came largely from its integrated service networks, which provide distribution channels and after-sales service for its products throughout China. Some media reports indicate that the Hong Kong–listed company may soon expand its presence in Japan with the purchase of Sanyo Electric.

CLOTHING

Greenbox

Greenbox was founded in 2006 and has risen rapidly to become China’s leading online children’s clothing retailer. The company already boasts several of the country’s most popular brands, and in August, Disney announced that it would partner with Greenbox to distribute its clothing in China. The private company has received more than $18.8 million in financing from international venture capital firm DCM and private equity firm Trustbridge Partners.

ELECTRONICS

Apple

Apple is succeeding where many of its multinational counterparts have failed. By leveraging its strong brand name and difficult-to-replicate technology, the company has become the most popular electronics firm in China, with its Greater China sales this year outpacing domestic PC maker Lenovo. The company has opened several wildly popular company-owned stores across China and—surprisingly—secured patents on its store design after media reports exposed counterfeit stores in some Chinese cities.

INTERNET

Baidu

China is now home to 500 million Internet users. Baidu handles more than 75% of their Internet searches, according to Beijing-based Enfodesk. The search engine giant strengthened its position after its primary rival, Google, moved its servers to Hong Kong last year following a dispute with the Chinese government. In July the company signed an agreement to pay royalties to One-Stop China, a joint venture of Universal, Sony and Warner Music, for streaming and downloading of music from the Baidu website.

MEDIA

Sina

Less than two years old, Sina’s Weibo microblogging service has become a cultural phenomenon. With more than 200 million users, Weibo is now the leading venue for celebrity announcements and Internet gossip. Weibo users have also provided news coverage and critical analysis of several sensitive issues this year, including the government’s response to a train accident in July and public protests over a chemical factory in Northeast China.

METALS AND MINING

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech

China supplies more than 95% of the world’s rare earth minerals, which are used in the development and production of many high-tech products. Baotou is China’s largest supplier of rare earth minerals and is consolidating that position by taking over smaller rare earth miners. The move could eventually give Baotou control over the country’s rare earth mineral supply even if WTO decisions force the government to loosen its quotas.

OIL AND GAS

Citic Resources

Three companies—Sinopec, PetroChina and CNOOC—have dominated China’s oil and gas sector for years. Citic Resources hopes to eventually challenge these giants by expanding its crude oil supply base through investments in Kazakhstan and Indonesia as well as in northeast China. While the company still draws most of its revenue from the commodities trade, Citic’s crude oil sales jumped by 60.7% in the first half of 2011. The company’s net profit rose by 134.7%.

RENEWABLE ENERGY

China Hydroelectric Corporation

Decades of rapid growth have severely impacted China’s environment, and the country’s policymakers are strongly encouraging the development of renewable energy sources. As a result, heavy investment has led to overcapacity in many renewable energy industries, especially in wind and solar power. China Hydroelectric Corporation has veered from the bigger-is-better approach, investing in small dams across China to produce electricity. This has allowed the company to build its business while avoiding overinvestment—as well as controversies over the environmental impacts of larger dams. After strong rainfall in 2010, the company saw its annual profit rise 120%.

STEEL

Jiangsu Shagang Group

Jiangsu Shagang Group has grown from a small independent company in the late 1970s to become the country’s largest private steel company and second largest steel company overall. China’s steel market has cooled this year as government policies to rein in real estate investment dampened demand. In response, Shagang has focused attention on developing other aspects of its business, announcing earlier this year that it would invest as much as RMB30 billion ($4.7 billion) in a logistics center in the port town of Zhangjiagang.

TRANSPORTATION

Hainan Airlines

China’s airlines have struggled in recent years as fuel prices increased and competition intensified. Hainan Airlines, the country’s largest private airline, has maintained profitability while expanding its global reach. Profits rose almost 17% in the first half, and the airline added routes to Zurich and Sydney. Media reports indicate that Hainan Air may expand further if its parent company successfully bids for the airport-related investments of German company Hochtief. Hainan Air also enjoys a reputation for safety and customer service, and became the first mainland Chinese airline to receive the Skytrax 5-Star Airline award earlier this year.

TELECOM

Huawei

Huawei is arguably China’s most international company. The employee-owned private telecommunications equipment maker supplies 45 of the world’s top 50 telecom operators and has enterprises in more than 140 countries. Almost half of its 110,000 employees are based outside of China. The company also has 20 research and development centers around the world, with 46% of its employees engaged in R&D-related activities. Its first-half sales revenue grew by 11%, boosted by the popularity of its Android-based smart phones and cloud computing products.

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