Top 500 private companies see growth in revenue

The top 500 Chinese private companies are seeing improvement in their revenue earnings and are increasing investment in research and development, as they strive for more technological innovations, said a report released on Tuesday.

According to the annual report by the All-China Federation of Industry and Commerce, a national body serving the private sector, the country's leading 500 private enterprises recorded total revenue of 39.83 trillion yuan ($5.46 trillion) last year, which represents a 3.94 percent year-on-year growth.

E-commerce company JD topped the revenue rankings with 1.05 trillion yuan, followed by e-commerce and tech heavyweight Alibaba Group Holding with 864.53 billion yuan, oil and coal enterprise Hengli Group with 611.75 billion yuan and nonferrous metal enterprise Amer International Group with 608.76 billion yuan.

In terms of R&D investment, tech company Tencent Holdings won the crown with 61.4 billion yuan, followed by Alibaba Group and Baidu Inc, with 53.8 billion yuan and 23.3 billion yuan, respectively.

Huawei Technologies, which topped the 2022 list with a staggering R&D investment of over 100 billion yuan, did not participate in the rankings this year.

In 326 of the top 500 private companies, R&D staff account for more than 3 percent of all employees. The core technologies of 414 enterprises are independently developed, while 90 percent of the 500 companies have pushed forward their digitalization plans, the report said.

Peng Wensheng, chief economist and head of research at China International Capital Corp, said: "China's economy will rely more on technological innovations in the future as demographic dividends gradually decrease. To achieve technological progress, continuous R&D investment is the key."

According to China's 14th Five-Year Plan (2021-25), the country will scale up its R&D spending by more than 7 percent annually to drive more technological breakthroughs. Consulting firm McKinsey & Co said in a report that 7 percent annual growth in R&D spending will set China on the path to becoming the world's largest spender on R&D.

"China's R&D investment must be increased substantially in the coming decades to get rid of what we call the 'late-mover disadvantage', compared with developed countries such as the United States," Peng said.

The All-China Federation of Industry and Commerce report also noted that the entry threshold for the top 500 private enterprises reached 27.58 billion yuan in revenue for this year's rankings, 1.21 billion yuan more than the previous year.

Zhao Dejiang, secretary-general of the federation, said: "The report showed that the top 500 Chinese private companies have seen steady improvement in quality and technological innovations amid rising economic uncertainties, thanks to a series of targeted support measures offered by the government in driving the private economy."

All-out efforts have been made to drive the private sector over the past year. In September, a special bureau was set up within the National Development and Reform Commission to offer targeted support for private enterprises, and in July, a top-level national guideline to drive the development of the private economy was released.

Private enterprises, which accounted for over 97 percent of China's total market entities last year, are the primary driver of the country's economic development. They have contributed about 50 percent of the country's tax revenues, 60 percent of GDP and 70 percent of technological innovations, data from the Ministry of Industry and Information Technology showed.

However, the top 500 private companies gained net profit of 1.64 trillion yuan in 2022, down 4.86 percent year-on-year, the report said.

Among the 500 companies, 38 experienced losses last year. The number is 16 more than in 2021. These enterprises are mainly from the housing, internet and aviation sectors, the report added.

Liu Yonghao, chairman of leading agricultural company New Hope Group, said that as a private entrepreneur, he received substantial support, which greatly boosted his confidence and allowed him to invest more in business optimization and technology improvement measures.