A recent report, released on Tuesday by the All-China Federation of Industry and Commerce, reveals significant revenue growth and heightened investments in research and development among China’s top 500 private companies as they actively pursue technological advancements.
According to the annual report, the leading 500 private enterprises in China collectively achieved a total revenue of 39.83 trillion yuan ($5.46 trillion) last year, reflecting a substantial year-on-year growth of 3.94 percent.
JD, the renowned e-commerce company, secured the top spot in revenue rankings with 1.05 trillion yuan, followed closely by e-commerce and technology giant Alibaba Group Holding, reporting 864.53 billion yuan in revenue. Hengli Group, a prominent player in the oil and coal sector, stood at 611.75 billion yuan, while Amer International Group, a nonferrous metal enterprise, recorded 608.76 billion yuan.
In terms of research and development (R&D) investments, Tencent Holdings emerged as the leader with an impressive commitment of 61.4 billion yuan, followed by Alibaba Group and Baidu Inc., with investments of 53.8 billion yuan and 23.3 billion yuan, respectively.
Notably, Huawei Technologies, which had topped the list in 2022 with an R&D investment exceeding 100 billion yuan, did not participate in this year’s rankings.
Among the top 500 private companies, 326 allocated more than 3 percent of their workforce to R&D roles. Additionally, the core technologies of 414 enterprises were developed independently, and a remarkable 90 percent of these companies advanced their digitalization initiatives, as highlighted in the report.
Peng Wensheng, Chief Economist and Head of Research at China International Capital Corp, emphasized the growing importance of technological innovations for China’s economy, particularly as demographic advantages wane. Continuous investment in R&D, Peng noted, is the linchpin to achieving technological progress.
China’s 14th Five-Year Plan (2021-25) underscores the commitment to increase R&D spending by over 7 percent annually to drive technological breakthroughs. According to a report by McKinsey & Co., this growth trajectory will position China as the world’s largest spender on R&D.
Peng explained, “To overcome what we call the ‘late-mover disadvantage’ in comparison to developed countries like the United States, China must substantially increase its R&D investment in the coming decades.”
The report also revealed that the revenue threshold for inclusion in the top 500 private enterprises reached 27.58 billion yuan this year, an increase of 1.21 billion yuan compared to the previous year.
Zhao Dejiang, Secretary-General of the All-China Federation of Industry and Commerce, highlighted the impressive progress in quality and technological innovations among the top 500 Chinese private companies. He attributed this success to targeted government support measures aimed at bolstering the private sector amidst rising economic uncertainties.
Over the past year, concerted efforts have been made to support the private sector. A dedicated bureau was established within the National Development and Reform Commission in September to provide tailored assistance to private enterprises, and a national guideline to stimulate private economy development was released in July.
Private enterprises, which accounted for over 97 percent of China’s total market entities last year, continue to be a driving force in the country’s economic development. They contribute around 50 percent of the country’s tax revenues, 60 percent of GDP, and an impressive 70 percent of technological innovations, according to data from the Ministry of Industry and Information Technology.
However, the report noted that the top 500 private companies collectively reported a net profit of 1.64 trillion yuan in 2022, marking a 4.86 percent year-on-year decrease. Among these companies, 38 experienced losses last year, with this number increasing by 16 compared to 2021. The affected enterprises were primarily from the housing, internet, and aviation sectors.
Liu Yonghao, Chairman of leading agricultural company New Hope Group, expressed gratitude for the substantial support he received as a private entrepreneur. This support bolstered his confidence and enabled him to invest more in business optimization and technological enhancements.