Sunday, April 28, 2013

Going Global

Are you familiar with this brand?

How about this one?

You are probably thinking they must be a couple of start-ups.  You would be wrong.

These are the logos of the top two companies on the recently released Forbes Global 2000 list of the world's top 2000 companies.  They are both banks in China.  They topped Exxon Mobil, JP Morgan Chase, General Electric and Berkshire Hathaway, among others, on the Top 10 list.

Forbes arrives at its ranking of the world's top companies by equally weighting sales, profits, assets and market value.

#1 on the list is ICBC.  That is the Industrial & Commerical Bank of China (ICBC).  It has almost $3 trillion in assets and over 400,000 employees.  It was founded in 1984!

#2 on the global list is China Construction Bank.  It is a relative old-timer in China having been founded in 1954.  It has $2.2 trillion in assets and over 350,000 employees.

China now has 5 of the top 11 companies in the world according to Forbes.  The Agricultural Bank of China is #8, PetroChina is #9 and the Bank of China is #11.

If you need evidence that the balance of power in the world economy is changing, look no further than this year's Forbes Global 2000 list.

If you need evidence that it is changing quickly, consider that in the Forbes Global 2000 list for 2007 China had only one company in the top 50 (PetroChina at #41).

How did China come so far, so fast?

I wrote about the changes in China two years ago in "The China Numbers Game".  Most of what we are seeing today has only occurred as China moved away from its socialist economic system to one more focused on capitalist principles.

China had a planned socialist economy from its founding in 1949 to 1978.  In that year they first introduced the ability for farmers to grow what they wanted and sell much of it at market prices.  They opened up most of the rest of the economy to what they refer to as a "socialist market economic system" in 1984.  Since that time China's GDP per capita has increased some 13 fold in dollar terms. 
The Chinese are now focusing intently on new innovation and patents.  This from "China Business". 
In an extensive campaign significant for the global economy, China is targeting an astounding 2 million domestic patent applications annually by 2015, and wants to be one of the top two patent owning countries by 2020.  
How are they intending to get where they want to go?
To boost domestic patents, China will offer incentives of cash rewards, houses and tax breaks to scientists and innovators. The patent master plan promises infrastructure for quicker filing, examining and granting of patents, funding patent holders, and integrating new patents into the economy.  
It is truly amazing what can happen when people are given incentives to innovate and produce.  That is why socialist, collectivist and communism systems never work.  That is why China is the economic miracle of the world the last 20 years and why North Korea, Cuba and Venezuela continue to struggle.  

My only advice is that if you have children steer them away from French and Spanish as their choices for foreign languages.  They need to learn Chinese.

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