china distribution & trading issue 84 june 2011 - fung · pdf fileli & fung research...

Development of private enterprises in China

After more than three decades of rapid development, we see the

emergence of a very strong private sector in China. Indeed,

private enterprises have grown rapidly over the years and

become an integral part of the Chinese economy.

Today, entrepreneurship and the development of private

enterprises continue to be at the forefront of economic

development. They have not only contributed significantly to

economic growth, employment, and tax revenue, but also played

an increasingly dominant role in management, corporate social

responsibility and compliance. These contributions help China

achieve development in a more sustainable way.

This reports aims to present an overview of the development of

private enterprises in China, with Part I discussing the historical

development of private enterprises and Part II on the concept and

definition of the private sector. Part III gives an overview on the

latest development of private enterprises as well as the

performance of the Top 500 private enterprises in China. Part IV

gives a brief account on government initiatives to boost the

development of the private sector. Part V discusses the outlook

for the development of private sector during the 12th Five-year

plan period (2011-2015). Finally, Part VI provides an overview of

the development of the five most popular merchant groups in

China and studies the characteristics and attributes of the

entrepreneurs.

I. Historical development of

private enterprises

II. Definition of private sector

III. Overview of the latest

development of private

enterprises in China

IV. Government initiatives to

boost private sector

V. Outlook for the development

of private economy during

the 12th

Five-year plan

period

VI. Overview of the

development of the five

major regional merchant

groups

Li & Fung Research Centre

11/F, LiFung Tower,

868 Cheung Sha Wan Road,

Hong Kong

Tel: (852) 2300 2470

Fax: (852) 2635 1598

E-mail: [email protected]

http://www.lifunggroup.com

IN THIS ISSUE:

LI & FUNG RESEARCH CENTRE

China Distribution & Trading Issue 84 June 2011

Li & Fung Research Centre Member of the Li & Fung Group

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Part I Historical development of private enterprises

The development of private enterprises in China has its own special background. There have been several development

phases since the formation of the PRC in 1949. During 1949-1978, the development of the private sector was nearly

completely suppressed. It was not until the country adopted a series of reform policies and opening-up policies in the

late 1970s that the private sector started to re-emerge with the launching of a series of policies measures.

A very important development was the Constitutional amendments in 1982, establishing the private sector as a

legitimate component of the socialist economy complement to the state-owned economy. Green light was first given for

the establishment of individually-owned business (or “getihu”), which refers to business owned by private individual or

household. According to the Provisional Measures on the Administration of Urban and Rural Individually-owned

Business《城鄉個體工商戶管理暫行條例》promulgated by the State Council in 1987, a getihu is allowed to hire only one

or two apprentices and as many as five helpers, for a total of not more than seven persons.

Later, the central government also gave permission for the establishment of privately-owned enterprise (or “siying qiye”) ,

which is defined as a profit-making economic entity that employs at least eight persons with its assets owned by private

individual(s).

The status of private enterprises was formally recognized with the enactment of the Provisional Measures of Private

Enterprises of the PRC 《中華人民共和國私營企業暫行條例》 in 1988. Under the Measures, private enterprises were

regarded as profit-making economic units invested and established or controlled by natural persons and using more

than eight employees. The Measures also reiterated that the private sector was a supplement component of the socialist

public economy, and that its lawful rights and lawful profits are protected by the state. Siying Qiye can take different

forms – sole proprietorships, partnerships, limited liability companies, and shareholding corporations. There are different

requirements for the number of owners and registered capital for different forms of private ownership.

During the 1990s, the private sector emerged as one of the most dynamic elements of the Chinese economy. A change

in official attitude toward the sector was signaled at the 15th Party Congress in 1997, when the Party changed the

position of the private economy from the previous “complement to the state-owned economy” to an “important

component of the socialist market economy.” This recognition was formalized in an amendment to the Chinese

constitution in 1999. Furthermore, in 2001, private entrepreneurs were officially granted access into the Communist

Party.


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Besides, the reform of the state-owned enterprises (SOEs) and the restructuring and privatization of the

collectively-owned enterprises (COEs)1 have further contributed to the rapid development of the private sector.

Part II Definition of private sector

Defining private sector or private enterprises in China is a fairly complex issue. There are different concepts relating to

the term “private” including non-state sector, individually-owned business, privately-owned enterprises, private sector,

private economy, etc. Yet, it seems that none of these concepts have a very clear definition.

The broader concept of non-state sector covers a very large group as it refers to all firms that are not SOEs; it also

encompasses urban and rural COEs. However, as many of these enterprises (so-called “red hat firms”) share ownership

with local governments to obtain privileges that the governments extend to collective firms; so strictly speaking, they

cannot not be considered as part of the private sector.

In this newsletter, we use the narrowly defined approach, which includes only two major types of local private business –

privately-owned enterprise and individual business. In some cases, due to unavailable data, the concept of non-state

owned sector is being adopted.

Part III Overview of the latest development of private enterprises in China

Since the opening up of the country, the private sector has played an increasingly important role in the economy; it has

contributed significantly to economic growth, employment, tax revenue, etc. This session discusses the latest

development of private enterprises as well as the performance of the top 500 private enterprises in China.

1 Collectively-owned enterprises (COEs) are formally owned by the people of the regions where the enterprises are located, but they

are effectively controlled by the local governments. The local governments play a major role in helping the enterprises to gain access

to production inputs and infrastructure services. A major type of COEs is the township-and-village enterprises.


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1. Present situation of private enterprises2

(1) Rapid growth in the number of private enterprises

The total number of registered privately-owned enterprises rose by 12.6% yoy to reach 7.4 million in 2009, accounting

for over 70% of the total number of registered enterprises. The number of privately-owned enterprises signaled a strong

growth rate in 2009 after facing a declining growth rate for five consecutive years since 2003. Exhibit 1 illustrates the

number of privately-owned enterprises and individually-owned businesses in China. The top five provinces with the

highest number of privately-owned enterprises were Jiangsu, Guangdong, Shanghai, Zhejiang and Shandong,

respectively (see Appendix A for more details).

Exhibit 1 Number of privately-owned enterprises and individually-owned businesses and their growth rates,

2002-June 2010

Year Number of privately-owned

enterprises

(million)

yoy growth

(%)

Number of individually-owned

businesses

(million)

yoy

growth

(%)

2002 2.6 20.0 23.8 -2.3

2003 3.3 24.6 23.5 -1.0

2004 4.0 22.4 23.5 -0.1

2005 4.7 17.3 24.6 4.8

2006 5.4 15.3 26.0 5.3

2007 6.0 10.8 27.4 5.6

2008 6.6 9.0 29.2 6.4

2009 7.4 12.6 32.0 9.6

2010.6 7.9 6.7 33.3 4.1

Note: The number of privately-owned enterprises includes the number of their branches

Source: State Administration for Industry & Commerce, PRC

In terms of industrial structure, most of the privately-owned enterprises were engaged in tertiary industry (68.0%),

followed by secondary industry (29.8%). Only 2.2% of the privately-owned enterprises were engaged in primary industry

in 2009. Sector-wise, the wholesale and retail industry and manufacturing industry were having the highest number of

privately-owned enterprises (see Exhibit 2).

2

The analysis in this session was based on 2009 figures as the data for the entire 2010 were not available when the author

compiled this Newsletter. The 1H2010 data were provided for reference only.


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Exhibit 2 Breakdown of the total number of privately-owned enterprises in China by sector, 2009

2631.9

1744.9

716.8

379.4

366.5

274.3

248.6

242.6

195.4

163.6

136.7

86.2

59.9

47.5

34.7

29.8

23.9

10.1

8.8

0 500 1000 1500 2000 2500 3000

Wholesale and retail

Manufacturing

Leasing and business services

Scientific research, technical services and geological prospecting

Construction

Information transmission, computer services and software

Property

Services to households and other services

Transport, storage & post service

Agriculture, forestry, animal husbandry and fishery

Hotels and catering

Sports and entertainment products

Mining

Others

Production and supply of electricity, gas and waterManagement of water conservancy, environment and public

facilitiesFinance

Health, social securities and social wellfare

Education

(thousand households)


On the other hand, the individually-owned businesses also demonstrated rapid development. The number of registered

individually-owned businesses increased steadily over the past few years; in 2009, there were 32.0 million of getihu in

China, up by 9.6% yoy. The top five provinces with the highest number of individually-owned enterprises were

Guangdong, Jiangsu, Shandong, Sichuan and Zhejiang, respectively (see Appendix B for more details).

Looking at the industrial structure, most individually-owned enterprises were engaged in tertiary industry (28.8 million or

90.0%). However, as the government has implemented a number of measures to improve the well-being of farmers in

recent years, more farmers were eager to set up their own household businesses. As a result, although there were only

426,700 individually-owned enterprises engaging in the primary industry in 2009, it registered a stunning yoy growth rate

of 33.7%.


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Similar to the privately-owned enterprises, the majority of individually-owned enterprises were also engaged in

wholesale and retail businesses. In 2009, there were 19.9 million (or 62%) of individually-owned enterprises engaging in

wholesale and retail industry (see Exhibit 3 for details of the breakdown of the total number of individually-owned

enterprises in China by sector).

Exhibit 3 Breakdown of the total number of individually-owned enterprises in China by sector, 2009

19903.23245.1

2812.52640.4

1596.4426.7373.7288.5209.6195.787.266.753.144.726.116.09.27.20.8

0 5000 10000 15000 20000 25000

Wholesale and retail

Services to households and other services

Hotels and catering

Manufacturing

Transport, storage & post service

Agriculture, forestry, animal husbandry and f ishery

Leasing and business services

Others

Information transmission, computer services and softw are

Sports and entertainment products

Health, social securities and social w ellfare

Construction

Mining

Property

Scientif ic research, technical services and geological prospecting

Production and supply of electricity, gas and w ater

EducationManagement of w ater conservancy, environment and public

facilitiesFinance

(thousand households)


(2) Operation and production scales set to further increase

Total registered capital for privately-owned enterprises increased considerably by 24.7% yoy to reach 14.6 trillion yuan

in 2009; while the total registered capital for individually-owned businesses surpassed 1,085.7 billion yuan in 2009,

increased by 20.6% yoy (see Exhibit 4). The operation scale of the privately-owned enterprises is set to increase further

in the future as they are, in general, having more set-up capital.


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Exhibit 4 Registered capital of privately-owned enterprises and individually-owned businesses and their growth

rates, 2002-June 2010

Year Registered capital for

privately-owned enterprises （（（（trillion yuan））））

yoy

growth

(%)

Registered capital for

individually-owned businesses

(billion yuan)

yoy growth

(%)

2002 2.5 35.9 378.2 10.1

2003 3.5 42.3 418.7 10.7

2004 4.8 35.7 505.8 20.8

2005 6.1 28.0 581.0 14.9

2006 7.6 24.0 646.9 11.3

2007 9.4 23.6 735.1 13.6

2008 11.7 25.0 900.6 22.5

2009 14.6 24.7 1085.7 20.6

2010.6 16.5 12.8 1201.2 10.6


In terms of total fixed asset investment, the total investment in fixed assets by the non-state owned domestic enterprises

increased by 32.5% yoy to reach 9.4 trillion yuan in 2009, accounting for 48.2% of China’s total investment in fixed

assets. The share of investment in fixed assets by the non-state owned sector was higher than that of the state-owned

economy3 (44.6%) and the foreign invested enterprises (7.3%). See Exhibits 5 and 6 for more details.

3 State-owned economy here excludes State-owned enterprises and joint ownership enterprises as defined by the National Bureau of

Statistics.


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Exhibit 5 Investment in fixed assets by different types of enterprises, 2004-June 2010

(billion yuan))

Source: National Bureau of Statistics, PRC

Exhibit 6 Composition of investment in fixed assets by different types of enterprises, 2004-June 2010


2004 2005 2006 2007 2008 2009 2010.6

2010.1-6

yoy growth

(%)

Total investment 5,902.8 7,509.5 9,336.9 11,746.5 14,873.8 19,413.9 9,804.7 25.5

Of which:

State-owned

economy

3,409.2 3,867.8 4,482.4 5,222.9 6,399.8 8,653.6 4,045.4 21.5

Foreign-invested

enterprises

696.8 842.4 992.5 1,219.3 1,417.9 1,411.1 661.0 8.0

Non-state owned

domestic

enterprises

1,796.8 2,799.3 3,862.0 5,304.3 7,056.1 9,349.2 5,098.4 31.9

%


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In addition to increasing operation scale, privately-owned enterprises have also raised their production capability

significantly. The growth rate of value-added of industry of privately-owned enterprises was also well above national

average and other forms of enterprises. Value-added of industry of privately-owned enterprises above designated size

in China increased by 18.7% yoy, which was 7.7 ppt higher than the national growth rate of 11.0% yoy in 2009 and 11.8

ppt higher than that of state-owned and state-holding enterprises. As shown in Exhibit 7, the growth rate of value-added

of industry of privately-owned enterprises above designated size has long been higher than that of enterprises with other

forms of ownership structures.

Exhibit 7 Comparisons of growth rates of value-added of industry by various types of enterprises, 2001-June

2010


(3) Significant contribution to tax revenue and employment by the private sector

Development of the private sector has created a considerable amount of tax revenue for the government. In 2009, the

total amount of tax contributed by the privately-owned enterprises totaled 637.8 billion yuan, up by 8.6% yoy. The growth

rate was 0.5 ppt lower than the national average and 14.5 ppt lower than that in 2008. On the other hand, the

individually-owned businesses achieved tax payment of 220.8 billion yuan in 2009, with a yoy growth rate of 11.0%,

which was 1.9 ppt higher than the national average but 23.0 ppt lower than in 2008. As indicated in Exhibit 8, the growth

rates of tax contribution of privately-owned enterprises and individually-owned businesses were much higher than that

of the SOEs (-1.7%).

%


10



Exhibit 8 Contribution to tax revenue by various types of enterprises, 2000-June 2010

(billion yuan)

2000 2005 Average

yoy

growth in

5 years

(%)

2006 2007 2008 2009 2010.1-6

State-owned enterprises 540.0 748.8 806.2 951.2 1000.1 983.4 608.0

yoy growth % N/a 9.3 6.8 7.7 18.0 5.1 -1.7 26.9

Domestic-invested

non-state owned

enterprises

504.9 1702.9 2162.4 3003.1 3377.2 3978.4 2577.2

yoy growth % N/a 31.2 27.5 27.0 38.9 12.5 17.8 36.5

Private enterprises 42.0 271.6 350.5 477.2 587.4 637.8 414.5

yoy growth % N/a 36.1 45.3 28.6 36.1 23.1 8.6 37.1

Individually-owned

enterprises

76.3 138.6 119.5 148.4 198.9 220.8 132.1

yoy growth % N/a 14.3 12.7 N/a 24.2 34.0 11.0 32.1

Foreign-invested

enterprises

221.7 634.9 795.0 990.6 1196.1 1348.6 844.2

yoy growth % N/a 18.5 23.4 25.2 24.6 20.7 12.7 25.5

Total amount 1266.6 3086.6 3763.6 4944.9 5786.2 6310.4 4029.4

yoy growth % N/a 20.0 19.5 21.9 31.4 17.0 9.1 28.3

Note: Tax revenue excludes agriculture tax and customs duties, but includes value-added tax and consumption tax for

imported goods.

Source: State Administration of Taxation, PRC, average yoy growth rates calculated by author

Similarly, the private sector has also played a key role in employment creation. Unemployment issue heightened in

China in 2009 following the global financial crisis. Privately-owned enterprises, in particular, have made great

contributions to solving the problem of unemployment in the critical moment. The total number of employees of

privately-owned enterprises and individually-owned businesses rose by 11.1% yoy to reach 151.9 million in 2009 (see

Exhibit 9). According to Annual Report of Non-state owned Economy in China (2009-2010), more than 90% of the new

job vacancies in urban cities were offered by non-state owned enterprises.


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Exhibit 9 Contribution to employment by the private sector, 2000- June 2010

Privately-owned enterprises Individually-owned

businesses

Total

Year Number

of employees

(million)

yoy

growth

(%)

Number

of employees

(million)

yoy

growth

(%)

Number

of employees

(million)

yoy

growth

(%)

2000 24.1 19.0 50.7 -18.8 74.8 -9.5

2005 58.2 16.1 49.0 6.8 107.3 11.7

2006 65.9 13.1 51.6 5.3 117.5 9.5

2007 72.5 10.1 55.0 6.5 127.5 8.5

2008 79.0 9.0 57.8 5.1 136.8 7.3

2009 86.1 8.9 65.9 14.0 151.9 11.1

2010.6 89.0 3.4 66.9 1.6 155.9 2.6

Source: State Administration for Industry & Commerce, PRC, yoy growth rates calculated by author

(4) Import and export value of privately-owned enterprises declined; yet, its share in China’s total import and

export value has been increasing

Impacted by the global financial crisis, China’s total import and export value reduced by 13.8% to 2,207.2 billion USD in

2009; of which, the total import and export value generated by privately-owned enterprises also registered a slight

decline, down 4.3% from 456.5 billion USD in 2008 to 436.8 billion USD in 2009. The decline was milder than that of the

country’s total trade value.

Moreover, the share of privately-owned enterprises’ total import and export value in China’s total trade value has been in

a rising trend. It grew for five consecutive years, from 11.7% yoy in 2005 to 19.8% yoy in 2009 (see Exhibit 10).


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Exhibit 10 Import and export value of private enterprises, 2000-2009

(billion USD)

2000 2005 2006 2007 2008 2009

National total import &

export value

474.3 1422.1 1760.6 2174.5 2561.6 2207.2

yoy growth (%) 31.3 23.1 23.8 23.5 17.8 -13.8

Import & export value of

privately-owned

enterprises

3.75 166.2 243.58 347.6 456.5 436.8

yoy growth (%) 254.8 49.5 46.5 42.7 31.3 -4.3

% of national total 0.8 11.7 13.8 16.0 17.8 19.8

Source: Ministry of Commerce, PRC

2. Performance of the top 500 private enterprises in China

(1) Top 500s recorded strong performance in 2009

Every year, the All-China Federation of Industry and Commerce (ACFIC) releases the report of China’s top 500 private

enterprises (the Top 500s). Indicators for 2009 show that China's private enterprises have demonstrated high resilience

against the global financial crisis and performed well in the economic downturn.

The total revenues of the Top 500s amounted to 4.7 trillion yuan in 2009, an increase of 15.3% yoy. The top three private

enterprises were Jiangsu Shagang Group, Suning Appliance and Legend Holdings Ltd. – each with total revenues in

excess of 100 billion yuan in 2009. See Appendix C for the top 20 private enterprises in terms of total revenues.

The number of enterprises achieving total revenues of over 5 billion yuan also showed a big jump in 2009. As shown in

Exhibit 11, the number of enterprises earning total revenues of over 5 billion yuan increased from 253 in 2008 to 306 in

2009. On the other hand, the number of enterprises with total revenues of less than 5 billion yuan declined by 21.5% to

194 in 2009.


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Exhibit 11 Breakdown of the number of the Top 500 private enterprises in China by total revenues, 2008-2009

Total revenues

(yuan)

2009 2008 yoy

growth rate

(%)

>50 billion No. of enterprises 4 3 33.3

Share of Top 500s (%) 0.8 0.6

10-50 billion No. of enterprises 122 97 25.8

Share of Top 500s (%) 24.4 19.4

5-10 billion No. of enterprises 180 153 17.7

Share of Top 500s (%) 36.0 30.6

<5 billion No. of enterprises 194 247 -21.5

Share of Top 500s (%) 38.8 49.4

Source: Report of China’s top 500 private enterprises, 2010, the All-China Federation of Industry and Commerce

In terms of net profits, the Top 500s earned a total of 218.0 billion yuan in 2009, up by 32.8% yoy. The top five earners

were Wahaha Group, Fosun Group, Mongolia Yitai Group, BYD Company Ltd., and Sany Group Co. Ltd. See Appendix

D for the top 20 private enterprises in terms of net profits.

Among the Top 500s, only five companies generated a loss in 2009, down from 11 in the previous year. The total amount

of such losses dropped from 4.2 billion yuan in 2008 to 1.7 billion yuan in 2009.

(2) Higher tax contribution and employment creation

The contribution of tax revenues by top private enterprises to the total national tax increased rapidly in 2009. The Top

500s paid a total of 177.6 billion yuan in tax in 2009, up by 19.6% yoy. The growth rate of the tax revenues generated by

private enterprises doubled that of the growth rate of the total national tax, which stood at 9.8% in 2009. The top tax

payer was Suning Appliance, with a tax payable of 390.5 million yuan in 2009.

As for employment figures, the number of employees working for the Top 500s amounted to 452.5 million in 2009, an

increase of 9.5% over 2008. The growth rate of the Top 500s’ employment was more than 10 times higher than the

country’s average of 0.7%. In terms of new employments, 7.4% of the nation’s new jobs were created in the private

sector. Among the Top 500s, BYD employed the biggest number of workers, with a total of 162,803 employees.


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(3) The Top 500s predominantly engaged in manufacturing industry; however, the service sector witnessed

higher growth rate

The distribution of the Top 500s was highly uneven in terms of industrial structure. In 2009, the proportion of the Top

500s engaged in primary, secondary and tertiary industry was 0.6%, 76.2% and 23.2% respectively. The private sector

was dominated primarily by the manufacturing industry. Among the Top 500s, 381 companies were engaged in

manufacturing in 2009, down 2.1% from 389 in 2008. Nevertheless, the service sector also demonstrated excellent

growth prospects; despite having only 116 companies engaging in the service sector in 2009, it witnessed a remarkable

10.5% yoy growth.

Industry-wise, the top five industries with the biggest number of private enterprises were construction, smelting and

pressing of ferrous and non-ferrous metal, wholesaling and retailing, manufacturing of electrical machinery, cable and

measuring instrument, and manufacturing of textile and chemical fiber.

Another noteworthy observation was the gradual development of strategic emerging industries. To survive in the highly

competitive marketplace, more companies started to accelerate industrial upgrade and carry out innovations projects.

According to the survey report, among the Top 500 private enterprises, 36 companies were engaged in bio-medical R&D

business and 26 were engaged in new energy and related businesses.

(4) Uneven regional distribution of the Top 500s

The regional distribution of the Top 500s was severely unbalanced. In 2009, 81% of the Top 500 enterprises (or 405

enterprises) were located in the eastern region, particularly Zhejiang province and Jiangsu province. Moreover, the

eastern region also accounted for 82% and 79% of the total revenues and total assets of the Top 500s.

On the other hand, private enterprises in the western region also witnessed significant growth. Although the number of

enterprises decreased from 37 to 34 in 2009, their contribution to total revenues and total assets increased considerably.

Exhibit 12 illustrates the overall regional distribution of the Top 500s and Exhibit 13 shows the distribution of the Top

500s by province.


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Exhibit 12 Regional distribution of the Top 500 private enterprises, 2008-2009

Region Number of

enterprises

Total revenues

(billion yuan)

Total assets

(billion yuan)

2009 2008 2009 2008 2009 2008

Eastern

region

No. of

enterprises

405

395

3,905.7

3,385.3

3,079.6 2,223.2

Share of Top

500s (%)

81.0 79.0 82.5 82.4 79.0 78.7

Central

region

No. of

enterprises

44

48

307.8

286.2

253.9

209.4

Share of Top

500s (%)

8.8 9.6 6.5 7.0 6.5 7.4

Western

region

No. of

enterprises

34

37

376.2

312.7

368.7

262.2

Share of Top

500s (%)

6.8 7.4 9.9 7.6 9.5 9.3

North-

eastern

region

No. of

enterprises

17

20

146.6

125.7

196.1

130.2

Share of Top

500s (%)

3.4 4.0 3.1 3.1 5.0 4.6



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Exhibit 13 Distribution of the Top 500 private enterprises by province, 2009


(5) Gradual improvement in governance structure and internal operation

With increasing operation scale and the introduction of standardized management, private enterprises are heading

towards better governance and internal operation. Many large private companies have introduced systems such as the

board of directors, the shareholders’ meetings, board of supervisors, etc. and are moving gradually closer to modern

corporate system.

As shown in Exhibit 14, in 2009, the major decision makers of over 90% of the Top 500s were the board of directors and

shareholders; only around 7% of the enterprises were run dominantly by company’s chairman or CEO.


17



Exhibit 14 Highest decision-making bodies of the Top 500 private enterprises in China, 2009


(6) Increasing pace of going global

As China continues to become an economic powerhouse, more private Chinese enterprises are accelerating their global

activities.

In 2009, 23.4% of the Top 500s or 117 enterprises have already established a presence on the overseas market, up

from 112 enterprises in 2008. These enterprises owned a total of 481 projects overseas, surged by 57.2% yoy, and their

cumulative foreign direct investment amounted to US$2,252.7 million, up by 47.6% yoy. In 2009, Asian countries were

still the most popular destinations for Chinese companies going global. Having said that, more Chinese private

companies are eyeing the emerging markets; many have ventured into resourceful regions such as Africa in recent

years given the country’s plentiful natural resources, cheap labor, and fewer restrictions on trade.

In terms of global activities of Chinese private companies, most of them were engaged in selling and trading of goods in

2009. However, there has been a gradual increase in the number of enterprises progressing to setting up local

operations such as manufacturing facilities and engaging in R&D as well as resource exploitation activities.


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Part IV Government initiatives to boost private sector

In the past few years, the government has initiated a series of policy and legislative measure aimed to foster the

development of the private sector. Great efforts have been put in place to build competitive strength in the private sector.

Some of the major rules and regulations promulgated by the government in recent years are highlighted below.

1. Several Opinions of the State Council on Further Promoting the Development of Small- and Medium-sized

Enterprises《《《《國務院關於進一步促進中小企業發展的若干意見國務院關於進一步促進中小企業發展的若干意見國務院關於進一步促進中小企業發展的若干意見國務院關於進一步促進中小企業發展的若干意見》》》》

Due to the impact of the global financial crisis, the central government issued some relevant policies and measures to

increase support in terms of finance, taxation, credit, etc. and to improve the business environment for small- and

medium-sized enterprises. As a result, there have been positive changes in the production and operation of small- and

medium-sized enterprises, but the development situation was still severe and it was still difficult for them to get loans

and guarantee, etc. Thus the State Council, in September 2009, issued Several Opinions of the State Council on Further

Promoting the Development of Small- and Medium-sized Enterprises 《國務院關於進一步促進中小企業發展的若干意見》, calling for the adoption of more active and effective policies and measures to help small- and medium-sized enterprises

overcome difficulties and transform the development mode to realize sound and rapid development.

Major aims of the Opinions:

- Further constructing a sound environment favorable for the development of small- and medium-sized enterprises

- Effectively alleviating the difficulties of small- and medium-sized enterprises in financing

- Increasing the financial and taxation support for small- and medium-sized enterprises

- Accelerating the technical progress and structural adjustments of small- and medium-sized enterprises

2. Several Opinions on Encouraging and Guiding the Healthy Development of Private Investment 《《《《國務院關國務院關國務院關國務院關於鼓勵和引導民間投資健康發展的若干意見於鼓勵和引導民間投資健康發展的若干意見於鼓勵和引導民間投資健康發展的若干意見於鼓勵和引導民間投資健康發展的若干意見》》》》

To foster the development of the private sector, the State Council issued a set of opinions in May 2010 entitled Several

Opinions on Encouraging and Guiding the Healthy Development of Private Investment (or the new “36 Clauses”)《國務院關於鼓勵和引導民間投資健康發展的若干意見》. The new “36 Clauses ” was in fact a follow-up to the State Council’s

Circular on Encouraging and Guiding the Development of Non-public economy 《關於鼓勵支持和引導個體私營等非公有制經濟發展的若干意見》 released in 2005 as well as the above-mentioned Several Opinions of the State Council on

Further Promoting the Development of Small- and Medium-sized Enterprises.


19



According to the new “36 clauses”, private capital is welcome in infrastructural field as well as the monopolized

industries such as transportation, telecommunication and energy industries. Private capital will also be allowed to be

used to establish financial institutions. It is generally believed that the new policy, if properly implemented and enforced,

would encourage more private investment in different sectors, help create more jobs and encourage steady economic

growth.

Major aims of the new “36 clauses” : - Further expanding the fields and scope of private investment - Encouraging and guiding private capital into basic industries and infrastructure facilities - Encouraging and guiding the introduction of private capital to the municipal public utilities sector and the

construction of policy-based housing - Encouraging and guiding the introduction of private capital to the social ventures field - Encouraging and guiding the introduction of private capital to the financial services sector - Encouraging and guiding the introduction of private capital to the commercial and trade distribution sectors - Encouraging and guiding the introduction of private capital to the national defense technology sector - Encouraging and guiding the use of private capital to restructure consortiums and participate in the reform of

state-owned enterprises - Encouraging private enterprises to strengthen independent innovations, transformations and upgrades - Encouraging and guiding private enterprises to participate actively in international competition - Creating a favorable environment for private investment - Strengthening services and guidance for and the regulated management of private investment

In this year’s government work report, Premier Wen Jiabao reaffirmed the country’s eagerness to develop the private

sector by explicating stating that the government will earnestly implement the new “36 clauses”, genuinely eliminate all

visible and invisible barriers, and urge privately run enterprises to strengthen their innovation, transformation and

upgrading, etc.

3. Measures on the Individually-owned Business《《《《個體工商戶條例個體工商戶條例個體工商戶條例個體工商戶條例》》》》

To strengthen the rights and interests of individually-owned businesses and to properly regulate and manage their

development, the State Council promulgated the Measures on the Individually-owned Business 《個體工商戶條例》

(“the new Measures”) effective on 1 November 2011. The new Measures replaces the Provisional Measures on the

Administration of Urban and Rural Individually-owned Business《城鄉個體工商戶管理暫行條例》promulgated by the

State Council in 1987.


20



The key focus of the new Measures is that it scraps the maximum number of employees an individually-owned

businesses could employee. Starting from 1 November 2011, individually-owned businesses will be able to recruit as

many employees as they desire, as opposed to the current limit of employing not more than seven persons.

Besides, the new Measures also stipulate that the application for the individually-owned business shall apply to the

registration authority for record and registration at the place where the business premise is located.

Part V Outlook for the development of private economy during the 12th Five- year plan

period

1. Increasing contribution to the economy

Much of the dynamism of today’s Chinese economy is due to the vigor of the private enterprises. It is expected that the

private sector will continue to play a significant role in driving economic growth during the 12th Five-year plan period

(2011-2015).

According to the Annual Report on Non-state owned economy in China (2009-2010), the number of privately-owned

enterprises is expected to grow at an average rate of 10% per year during the 12th Five-year plan period, while the

number of individually-owned is expected to remain more or less the same. Besides, the private sector is expected to

play a dominant role in its contribution to the growth of the total fixed assets investment during the 12th Five-year plan

period. Total fixed assets investment by the private enterprises is estimated to have an average yearly growth of 12-14%

in 2011-2015.

Moreover, private enterprises are also expected to play an increasingly dominant role in management, corporate social

responsibility and compliance. These contributions help China achieve development in a sustainable way.

2. Venturing into strategic emerging industries and monopolized industries

To survive in today’s highly competitive marketplace, many private enterprises have accelerated their pace of industrial

restructuring and carried out various types of innovations projects. Many enterprises have ventured into to strategic

emerging industries such as new energy, biotechnology, high-end equipment manufacturing, etc. This is also aligned

with the government’s objective to accelerate the development of strategic emerging industries in the 12th Five-year plan

period.


21



On the other hand, the scope and field of private investment is expected to widen with the promulgation of the new “36

Clauses”. Some industries such as transport infrastructure, education, public services, finance, telecommunications, etc.

where non-governmental capitals used to be forbidden, have now opened to private enterprises.

3. Increasing pace of going global

Today, going global is no longer just the ambition of large SOEs. With increasing scale and more efficient

decision-making processed as well as flexible operation, many large private enterprises have been actively seeking to

expand their presence in the global arena. Moreover, growing pressure of overcapacity, competition, material supply, etc.

on the domestic market has further encouraged private companies to seek business opportunities on the overseas

market.

In recent years, we see many successful cases of Chinese private enterprises tapping the international market. Several

different ways have been adopted. Some enterprises sought to extend their manufacturing capabilities to overseas

markets and provide OEM, export or outsourcing services, etc. to customers in developed countries. Galanz, a

Guangdong based producer of microwave ovens is a good example. Others used their existing brands to tap the

international markets, which is what TCL and Haier have done. More remarkable is that some Chinese enterprises have

aggressively acquired the world-renowned companies to become the global leader of the industry. A prominent case

would be the Zhejiang-based auto maker Geely's takeover of the Sweden brand Volvo from US auto giant Ford in 2010.

The Chinese government fully supports the implementation of the going global strategy. During the 12th Five-year plan

period, the government will strive to improve relevant support policies, streamline examination and approval procedures,

and provide assistance for qualified enterprises and individuals to invest overseas. Certainly, going global will remain an

important strategy for many large private enterprises in the coming years.

4. Continual efforts to enhance core competence

In the wake of the global financial crisis, many private companies have strengthened their efforts to improve their

technological strength, management expertise and brand recognition, and will continue to do so in the next five years.

For large private enterprises with competitive edge, they will continue to strive to become stronger and bigger. Some will

extend to the upstream and downstream of the industrial value chain; others will enlarge their businesses scope and

expand into producer services fields such as providing financial services and modern logistics, etc. It is envisioned that

more Chinese private enterprises will appear in the Fortune Global 500 list towards the end of the 12th Five-year plan

period.


22



As for small- and medium- sized private enterprises, they will also strive to build their competitive strength. A quick and

efficient way perhaps is to ride on the well-developed network of the industry clusters. Due to close linkage within an

industry cluster, enterprises in a value chain can work more effectively together to improve efficiency. Besides, the

ongoing relationships among enterprises within a cluster enable them to learn from others the latest technologies as well

as new sales and marketing concepts, etc. This helps enhance enterprises’ technological strength as well as selling and

marketing skills.

5. Challenges abound, amid ample opportunities

As often as not, challenge is the twin of opportunity. The development of the private sector in China has certainly

undergone rapid progress in the past several decades. However, various factors still constitute a bottleneck to its future

development.

According to the survey of the afore-mentioned Top 500 private enterprises, lack of qualified human resources was

overwhelmingly identified by the private enterprises as their top key challenge (see Exhibit 15). Over 52% of the

surveyed enterprises saw the lack of experienced talents with the skills necessary to run private business as a major

obstacle that would affect their investment decisions. The fundamental problem for China is that while there are a lot of

managers with extensive experiences in running large SOEs, only very few have experience in managing large private

enterprises, which require totally different skill sets.

Other major obstacles constraining the development of the Top 500s as identified in the survey include limitation in land

use and difficulty in raising capital, high entry barriers, etc.


23



Exhibit 15 Major obstacles facing private enterprises


Apart from the obstacles mentioned above, we also see rising trade protectionism as a formidable constraint to the

further development of the entire private sector in China. To protect their domestic industries from foreign competition,

some developed countries continue to impose a series of protectionist policies against China. For instance, the frequent

use of antidumping measures toward Chinese exports has posed huge challenge to those export-oriented private

enterprises in particular.

Besides, with prices of raw materials, labor and land all rising, those small- and medium- sized private enterprises often

lack the scale economies and bargaining power required to minimize costs. In many cases, they also lack pricing power

in selling, which makes it difficult to pass on costs to the consumer.

Part VI Overview of the development of the five major regional merchant groups

Throughout the evolution history of China, we see the development of some influential regional merchant groups (or

“shangbang”) as well as prominent entrepreneurs. Historically, these regional merchant groups, formed by numerous

small private enterprises, engaged in the trading of commodities such as silk, salt, tea, rice, rye, cotton, iron, wood, etc.,

and had enjoyed great prosperity throughout several ancient dynasties. In fact, some still have great influence in today’s

commercial world.


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This session gives an overview of the development of the five most popular merchant groups that had appeared in

Chinese history as well as a brief description of their latest developments. It should be noted that the distinct

characteristics of the various merchant groups outlined below reflect the common attributes of that particular merchant

groups inherited from ancient times; in modern days, it is not a must for a certain entrepreneur to possess the

characteristics of the merchant group he or she belongs to. And surely, members of one merchant group are not isolated

from other groups. There are many partnership arrangements and work collaborations among entrepreneurs of different

merchant groups.

1. “Jinshang” (晋商晋商晋商晋商)

(1) Definition

Jinshang is generally referred to merchants originated from Shanxi province. It is one of the earliest merchant groups

appeared in China.

(2) Historical development

It first appeared in the Spring and Autumn Period (770-476 BC), when China was still a largely agricultural society with

an undeveloped commodity economy. Salt, at that time, was the most important commodity in China. The abundant

supply of salt in Shanxi gave rise to the emergence of the earliest Shanxi merchants.

Jinshang reached its greatest prosperity during the Ming Dynasty (1368-1644), in which government officials

commissioned merchants to transport food supplies. Shanxi was rich in mineral resources and most Jinshang engaged

in the trading of salt, tea and copper. Moreover, Shanxi merchants were also the forerunners in developing China’s

financial industry. “Rishengchang Piaohao” (日升昌票號) , the first private bank in China specializing in silver remittance,

money exchange, deposits and loans, was set up by Shanxi merchants in 1823.

(3) Characteristics

Shanxi entrepreneurs are renowned for their strong business acumen and their eagerness to take on new ideas and to

create something out of nothing; they are also highly committed to their ideas, visions or business strategies to achieve

their goals. Nonetheless, most Shanxi merchants trust the importance of collaboration. They treasure teamwork and

count on capable people who share their visions to achieve their goals.


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(4) Recent situations

Until the late Qing Dynasty (1644-1911) Shanxi merchants still monopolized a number of commercial activities in China.

However, the new generations of the then Jinshang did not make good use of their inherited wealth. Much of their

money was used to build luxurious residences, rather than invest in new business. Hence, this once regarded one of the

most prominent merchant groups in China began to decline in the early 20th century.

(5) Selected prominent Shanxi entrepreneurs

Although the old Jinshang had lost its influence in modern commercial world, still, there are a number of successful

Shanxi entrepreneurs. Examples of leading Shanxi entrepreneurs include: - Terry Guo (郭台铭), Chairman of Foxconn International Holdings Ltd. (富士康科技集團) - Robin Li (李彥宏), Chairman of Baidu, Inc. (百度線上網路技術(北京)有限公司) - Chen Feng (陳峰) , Chairman of HNA Group (海航集團)

2. “Huishang”(徽商徽商徽商徽商)

(1) Definition

Huishang is generally referred to merchants originated from Anhui province.


The fame of Anhui merchants rose in the Southern Song Dynasty (1127-1279), and their businesses prospered during

the Ming (1368-1644) and the Qing (1644-1911) dynasties. Most Huizhou merchants took part in the trading of salt, silk,

cotton, ink, paper, etc. Beside, many Huishang also engaged in pawn-broking business. It was said that by the reign of

Emperor Guangxu (1875-1908), all pawnbrokers in China were from Anhui province.

(3) Characteristics

Anhui entrepreneurs are well-known for their team spirit, moral integrity, humbleness and honesty. Comparing with other

merchant groups, Huishang, in general, are more affluent and possessed highly proficient trading skills. In fact, they

were regarded as one of the top merchant groups in Chinese history. However, as competition from both foreign and

domestic businessmen heated up in the late Qing Dynasty, the dominance position of Huishang gradually subsided.


Nowadays, given its affluent natural resources, Anhui province remains an important production base for agricultural

products, and iron and steel. Besides, many Anhui enterprises engage in new equipment and high technology industries.

These have contributed significantly to the nation’s economic development.


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(5) Selected prominent Anhui entrepreneurs - Wang chuanfu (王傳福), Chairman of BYD Company Ltd. (比亞迪股份有限公司) - Shi Yuzhu (史玉柱) – Chairman of Giant Interactive Group Inc. (上海巨人网络科技有限公司)

3. “Zheshang” (浙商浙商浙商浙商)

(1) Definition

Zheshang is generally referred to merchants originated from Zhejiang province.


Although Zheshang only became well known in the last few decades, their history could be dated back to the Qin

dynasty (221 to 206 BC). In the 18th century, the emergence of capitalism in China, together with the opening of the

Shanghai port to the outside world, provided a good opportunity for Zheshang.

(3) Characteristics

Zheshang is famous for their business acumen and entrepreneur spirit. Most Zheijiang entrepreneurs have a very strong

sense of market. Besides, they are also renowned for their hard-working spirit, courage to take risks and willingness to

cooperate with others. Most of them regard collaboration with others as a critical point to succeed in the market.

(4) Major types of Zhejiang merchants

Various types of merchants have emerged in Zhejiang province. Ningbo merchants are perhaps the best representatives

of Zheshang. Rising in the 19th century, they are considered to be the one of the most powerful regional merchants in

China’s history as well as today’s business world. Ningbo merchants are well-known for their truth-seeking attitudes and

eagerness to explore; their outstanding management ability and pragmatic attitudes help them stand out in China's

business sector.

Other parts of Zhejiang province, such as Wenzhou and Yiwu have also developed their distinctive merchant groups

with various characteristics. Wenzhou merchants played a leading role in the development of private economy during

the early days of economic reform. Wenzhou merchants are famous for their strong entrepreneur spirit, which gave rise

to the formation of the so-called “Wenzhou model”. In the early 1980s, thousands of individuals and family workshops

were engaged in household manufacturing, leading to the formation of vigorous industrial clusters as well as specialized

markets.


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In recent years Zhejiang has developed a unique development model, the so-called “Zhejiang model”, which

emphasizes overwhelmingly on encouraging entrepreneurship and on the development of small businesses. As a result,

Zhejiang has made itself one of the richest provinces in China. Although Zhejiang province covers only 1.06% of the

national territory, its GDP ranked fourth among all provinces and regions in 2009. Moreover, Zhejiang entrepreneurs

have also made great success in the private sector. Among the top 500 private enterprises in 2009, more than one third

(180 enterprises) was from Zhejiang.

(6) Selected prominent Zhejiang entrepreneurs - Jack Ma (馬雲) – Chairman of Alibaba Group (阿里巴巴集團) - Guo Guangchang (郭廣昌) – Chairman of Fosun International Ltd. (復星國際) - Li Shufu (李書福) – Chairman of Zhejiang Geely Holding Group (吉利控股集團) - Zong Qinghou (宗慶後) – Hangzhou Wahaha Group Co., Ltd. (杭州娃哈哈集團)

4. “Yueshang” (粤商粤商粤商粤商)

(1) Definition

Yueshang is commonly referred to merchants originated from Guangdong province.


The history of Guangdong merchants can be traced back to the Qin dynasty (221 to 206 BC). Guangdong is located in

southern China and faces the South China Sea. Given its strategic geographical location, many Guangdong merchants

started to engage in sea trade business in ancient time. Guangzhou, the capital city of Guangdong, served as an

important trading port. The Guangzhou port became one of China's busiest ports during the Ming dynasty and Qing

dynasty. In fact, the prominent “Maritime Silk Road”, an ancient maritime trade route connecting China and the rest of

the world, started in Guangzhou and extended across the Indian Ocean and to various countries situated around the

Persian Gulf. The “Maritime Silk Road” not only allowed Guangdong merchants to transport various types of goods from

China to other countries, but also served as a conduit for the exchange of knowledge, ideas and cultures.

(3) Characteristics

Guangdong merchants in general have very strong sense of the market. They are pragmatic and persistence to make

things happen against difficulties. Besides, a unique characteristic of Guangdong merchants is that they are eager to

utilize foreign capital, human resources and technology for expansion.


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(4) Recent satiations

Given Guangdong’s special geographical location – proximity to Hong Kong and Macau and bordering with South China

Sea, Guangdong has for long served as a window of China to the world. Besides, the province also took the lead in the

country’s reforms and opening-up policies, becoming the first province to benefit from China’s economic opening and

enjoy a first-mover advantage in developing manufacturing industries and foreign trade. Guangdong is in fact one of the

earliest regions where private enterprises began to develop, leading to the development of the well-known “Guangdong

model”. Guangdong model actually represents the unique nature of the Guangdong companies – exported-oriented,

engaged mostly in OEM business or relatively low value-added manufacturing, eagerness to seek cost reduction.

Today, Guangdong province remains an influential province in China and has a very strong private sector. Many

indigenous enterprises have also developed a strong brand name in their specialized areas and become market leaders

in China, such as Midea, Gree, BYD Auto, etc. On the other hand, Guangdong entrepreneurs, particularly those who

came from Chaozhou city (so-called “Chaoshang”) have also exerted enormous influence on the commercial world.

Chaozhou merchants have a reputation of being shrewd businessmen; they are willing to try and explore new ways of

doing business.

(5) Selected prominent Guangdong entrepreneurs - Li Ka-shing (李嘉诚) – Chairman of Hutchinson Whampoa Ltd. (和記黃埔) - Ma Huateng (馬化騰) – Chairman of Tencent Holding Ltd. (騰訊控股) - He Xiangjian (何享健) – Chairman of Midea Group (美的集團) - Liu Zhiqiang (劉志強)- Chairman of Heung Kong Group (香江集团) - Li Dongsheng (李東生) – Chairman of TCL Corporation

5. “Sushang” (蘇商蘇商蘇商蘇商)

(1) Definition

Sushang are commonly referred to merchants from Southern Jiangsu Province, particularly from Suzhou, Wuxi and

Changzhou cities.


Similar to other major merchant groups in China, the history of Jiangsu merchants could be dated back to the Ming and

Qing dynasties. In ancient times, Jiangsu merchants mostly concentrated in the areas surrounding the Taihu Lake

including Suzhou, Wuxi and Changzhou .


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Jiangsu is historically oriented towards light industries such as textiles, food, etc. Most Jiangsu merchants earned their

fortune from food business as well as silk, cotton and tea leaves trading. However, in recent decades, growth of the

heavy industry sector, including chemicals, metallurgy, construction materials, etc. accelerated and overtook that of the

light industry.

(3) Characteristics

Comparing with other merchant groups, Jiangsu merchants, in general, have a deeper understanding of Chinese culture.

Besides, Jiangsu merchants are well-known for their integrity and determination. They are also very adventurous and

innovative; thus, they often come up with unconventional, yet rational ideas.


Today, Jiangsu is one of the wealthiest provinces in China, with the second highest total GDP (after Guangdong). Some

southern cities like Suzhou and Wuxi have GDP per capita around twice the provincial average, making southern

Jiangsu one of the most prosperous regions in China.

Jiangsu is renowned for its “Sunan (or Southern Jiangsu) Model” which developed numerous collective and township

enterprises in the 1980s and 1990s. Township enterprises are government-funded enterprises that were set up by rural

farmers. Very often, they could obtain privileges granted by the governments. Until the mid-1990s, township enterprises

were a fast-growing form of enterprises and were the main contributors to Jiangsu’s economy. Since then, the rise of

industrial parks in the province has caught the attention of foreign investors and attracted massive investments from

many of them.

Jiangsu entrepreneurs have a long business history and brilliant performance. A group of Jiangsu companies have

achieved outstanding performance among private enterprises in China since the China's reform and opening-up. In

2009, a total of 109 Jiang enterprises have been included in the top 500 private enterprises in China. They have become

one of the leading enterprises of China's private economy and export-oriented economy's development.

(5) Selected prominent Jiangsu entrepreneurs - Liu Chuanzhi (柳傳志) – Chairman, Lenovo Group Ltd. (聯想控股有限公司) - Shen Wenrong(沈文榮) – President of Sha Gang Group (江蘇沙鋼集團) - Zhu Yicai (祝義才) –Chairman of Yurun Group (雨潤集團) - Chou Haihong (周海江) – President of Hong Dou Group Company Ltd. (紅豆集團) - Zhang Jindong (張近東) –Chairman of Suning Appliance Company Ltd. (蘇寧電器)


30



Appendix A Total number of privately-owned enterprises by provinces, 2009

Region Number of enterprises (including branches)

Beijing 432,290

Tianjin 126,089

Hebei 247,164

Shanxi 139,263

Inner Mongolia 94,844

Liaoning 266,809

Jilin 111,565

Heilongjiang 140,499

Shanghai 630,701

Jiangsu 911,554

Zhejiang 566,595

Anhui 189,525

Fujian 230,577

Jiangxi 136,628

Shandong 471,213

Henan 260,613

Hubei 230,567

Hunan 160,261

Guangdong 813,445

Guangxi 108,879

Hainan 66,647

Chongqing 142,785

Sichuan 325,476

Guizhou 71,738

Yunnan 136,746

Tibet 6,286

Shaanxi 170,178

Gansu 70,678

Qinghai 13,220

Ningxia 34,423

Xinjiang 94,281

Total 7,401,539



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Appendix B Total number of individually-owned enterprises by provinces, 2009

Region Number of enterprises

Beijing 807,886

Tianjin 210,156

Hebei 1,302,274

Shanxi 771,088

Inner Mongolia 693,841

Liaoning 1,459,614

Jilin 661,153

Heilongjiang 923,953

Shanghai 333,365

Jiangsu 2,614,427

Zhejiang 1,986,913

Anhui 1,250,875

Fujian 650,499

Jiangxi 839,578

Shandong 2,156,925

Henan 1,579,998

Hubei 1,392,770

Hunan 1,227,292

Guangdong 3,259,122

Guangxi 1,178,505

Hainan 212,042

Chongqing 720,024

Sichuan 2,034,929

Guizhou 597,864

Yunnan 986,655

Tibet 86,780

Shaanxi 736,259

Gansu 479,308

Qinghai 119,794

Ningxia 183,323

Xinjiang 516,451

Total 31,973,663



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Appendix C Top 20 private enterprises in China by total revenues, 2009

Ranking Company Industry Place of Origin

Total

revenues

(billion

yuan)

1 Jiangsu Shagang Group Co., Ltd. 江蘇沙鋼集團有限公司

Smelting of ferrous metals Jiangsu 146.3

2 Suning Electric Appliances Co., Ltd. 蘇寧電器集團

Wholesale and Retail Jiangsu 117.0

3 Legend Holdings Co., Ltd. 聯想控股有限公司

Communications, IT & electronic

equipment Beijing 106.4

4 Guangsha Holding Venture Capital Co.,

Ltd.廣廈控股創業投資有限公司 Construction Zhejiang 50.9

5 New Hope Group Co., Ltd. 新希望集團有限公司

Agriculture, Forestry, Animal

Husbandry & Fishery Sichuan 46.1

6 Hainan Airlines Group Co., Ltd. 海航集團有限公司

A wide range of industries (including

investment) Hainan 45.7

7 Jiangsu Yurun Food Group Co., Ltd. 江蘇雨潤食品產業集團有限公司

Food processing and food &

beverages manufacturing Jiangsu 45.2

8 Hangzhou Wahaha Group Co., Ltd. 杭州娃哈哈集團有限公司


beverages manufacturing Zhejiang 43.2

9

Xinjiang Guanghui Industry Investment

Group Co., Ltd. 新疆廣匯實業投資（集團）有限責任公司

Wholesale and Retail Xinjiang 42.5

10 BYD Co., Ltd. 比亞迪股份有限公司 Transport equipment manufacturing Guangdong 39.8

11 Dalian Wanda Group Co., Ltd. 大連萬達集團股份有限公司

Real Estate Liaoning 38.5

12 Hailiang Group Co., Ltd. 海亮集團有限公司

Smelting of non-ferrous metals Zhejiang 37.3

13 Sanpower Group Co., Ltd. 三胞集團有限公司

Wholesale and Retail Jiangsu 36.7


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Ranking Company Industry Place of Origin

Total

revenues

(billion

yuan)

14

Shanghai Fosun High Technology

(Group) Co., Ltd. 上海複星高科技（集團）有限公司

Broad categories (including

investment) Shanghai 36.1

15 Zenith Steel Group Co., Ltd. 中天鋼鐵集團有限公司


16 Tianjin Rockcheck Steel Group Co., Ltd. 天津榮程聯合鋼鐵集團有限公司

Smelting of ferrous metals Tianjin 33.9

17 Wumart Group Co., Ltd. 物美控股集團有限公司

Wholesale and Retail Beijing 32.6

18 East Hope Group Co., Ltd. 東方希望集團有限公司

Smelting of non-ferrous metals Shanghai 32.4

19 Red Star Furniture Group Co., Ltd. 紅星家具集團有限公司

Leasing and Business services Jiangsu 31.3

20 Sany Group Co., Ltd. 三一集團有限公司 General machinery and specialized

machinery Hunan 30.4



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Appendix D Top 20 private enterprises in China by net profits, 2009

Ranking Company Industry Place of Origin Net profit after

tax

(billion yuan)

1 Hangzhou Wahaha Group Co., Ltd. 杭州娃哈哈集團有限公司


beverages manufacturing

Zhejiang 8.8

2 Shanghai Fosun High Technology

(Group) Co., Ltd. 上海複星高科技（集團）有限公司

A wide range of industries

(including investment)

Shanghai 5.0

3 Inner Mongolia Yitai Group Co., Ltd. 內蒙古伊泰集團有限公司

Mining Inner Mongolia 4.3

4 BYD Co., Ltd. 比亞迪股份有限公司 Transport equipment Guangdong 4.1

5 Sany Group Co., Ltd. 三一集團有限公司

General machinery and

specialized machinery

Hunan 3.9

6 Jiangsu New Century Shipbuilding

Co., Ltd. 江蘇新世紀造船有限公司

Transport equipment Jiangsu 3.8

7 Jiangsu Shagang Group Co., Ltd. 江蘇沙鋼集團有限公司


8 Youngor Group Co., Ltd. 雅戈爾集團股份有限公司

Garments, footwear, hats and

leather manufacturing

Zhejiang 3.5

9 Dalian Wanda Group Co., Ltd.大連萬達集團股份有限公司

Construction Liaoning 3.2

10 Suning Electric Appliances Co., Ltd. 蘇寧電器集團

Wholesale and retail Jiangsu 3.0

11 China Oceanwide Holdings Group

Co., Ltd. 中國泛海控股集團有限公司

Construction Beijing 2.9

12 Tianjin Tiens Group Co., Ltd. 天津天獅集團有限公司

Medicine manufacturing Tianjin 2.9


35



Ranking Company Industry Place of Origin Net profit after

tax

(billion yuan)

13 Jiangsu Yurun Food Group Co., Ltd. 江蘇雨潤食品產業集團有限公司


beverages manufacturing

Jiangsu 2.7

14 Chongqing Longfor Properties Co.,

Ltd. 重慶龍湖企業拓展有限公司

Real Estate Chongqing 2.2

15 Fujian Hengan Group Co., Ltd. 福建恒安集團有限公司

Papermaking, printing,

stationery & sporting goods

Fujian 2.2

16 Shanghai People Enterprise (Group)

Co., Ltd. 上海人民企業（集團）有限公司

A wide range of industries

(including investment)

Shanghai 2.0

17 Hangzhou H3C Technologies Co., Ltd. 杭州華三通信技術有限公司

Communications, IT & electronic

equipment

Zhejiang 1.8

18 Jiangsu Suning Universal Group 江蘇蘇寧環球集團

Real Estate Jiangsu 1.7

19 East Hope Group Co., Ltd. 東方希望集團有限公司

Smelting of non-ferrous metals Shanghai 1.7

20 Xinjiang Guanghui Industry

Investment Group Co., Ltd. 新疆廣匯實業投資（集團）有限責任公司

Wholesale and retail Xinjiang 1.7


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