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World to see boom in big firms

Updated: 2013-11-07 00:34
By YU RAN in Shanghai ( China Daily)

Report: Nation to be 'engine'for companies

World to see boom in big firms

An additional 7,000 companies globally are expected to become large enterprises with revenues of more than $1 billion by 2025, with 70 percent of them likely to be based in emerging regions, especially China, a report has said.

The new report on the shifting global business landscape, which was released by the McKinsey Global Institute on Wednesday in Shanghai, said that many more large companies will develop in emerging cities and countries from the current 8,000 large companies worldwide, 75 percent of which are based in developed regions.

China is without a doubt the most powerful growth engine for new global companies, and now is the time for forward-thinking cities to build their reputations among Chinese business leaders, the report said.

The survey found that one-third of large companies are now headquartered in only 20 cities globally while three in 10 large Chinese companies are based either in Beijing or Shanghai. However, there might be more than 300 cities in China hosting at least one large company by 2025.

"Many city officials are focused on luring corporate headquarters, but it is actually relatively rare for companies to move their head offices," said Elsie Chang, an MGI senior research fellow.

Chang added that the more promising opportunity lies in attracting foreign subsidiaries as thousands of global companies are expanding into new markets.

For instance, opening more plants in China to make products tailored specifically to local buyers is the stated goal of PPG Industries Inc, a major global coatings and specialty products company, in the next three to five years.

"China is a very important market for PPG, being the second-largest market among 70 countries, while we have plans to continue to invest in China as our business grows and we want to apply our best technology to help our customers," said Mike Horton, PPG's president for the Asia-Pacific region.

With more than 30 plants in the Asia-Pacific region, 14 of which are on the Chinese mainland, PPG plans to develop its Chinese market step by step to become a major manufacturer and seller in the country.

"We are planning to find and work with more high-standard factories to manufacture what we sell in China instead of importing products from overseas to meet the increasing demand within the country," said Horton.

The number of large companies based in emerging regions is poised to far more than triple by 2025, rising from around 2,200 today to about 7,000 in 2025. This reflects rising incomes and growing local market opportunities in these regions, as well as the fact that local companies are expanding, maturing, and reconfiguring through mergers or acquisitions, the MGI report said.

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