China Emerging_ 1978-2008 - Xiao-bo , Wu [40]
Back then, few people in China knew about this ranking and even fewer were concerned with it. The idea of an annual sales volume on the order of billions of US dollars was so far out of their realm that they dismissed it. In 1995, Fortune broadened the scope of companies included in the ranking, and by this time, Chinese companies were more aware of the list’s prestige value. Getting into the Fortune 500, or what in China continues to be known as the World’s Strongest 500, became every Chinese entrepreneur’s dream.
In 1995, the Haier Company in Qingdao declared that it aimed to be among the Fortune 500 by the year 2006. Within six months, at least thirty other Chinese companies set themselves a similar target. Gradually, the Fortune 500 became a kind of mystical totem, a Holy Grail deeply embedded in the collective unconscious of China’s entrepreneurs.
The State Economic and Trade Commission soon announced that in the years to come, it would extend key support to six companies. These were Baosteel, Haier, Jiangnan Shipyard, North China Pharmaceuticals, Founder, and Changhong. The government would do everything in its capacity to enable these companies to enter the ranks of the Fortune 500 in the year 2010. These six companies had a number of features in common such as being backed by the state capital, proven competitiveness in their markets, and the leadership of a superlative entrepreneur.
Once the central government announced this “national team,” each province began to contend for attention with its own list. Each jostled for position, declaring that in a certain number of years its companies would also be joining the Fortune 500. The same thing occurred at local levels, with the goal to become one of the Top 100 in a given province. A movement began that was not only tied to the goal of the Fortune 500 but also mobilized the entire country to “grasp the strategy” of putting Chinese companies on the map.
This movement occurred at a peak of economic development in Asia, and the Korean company Daewoo was regarded as the role model. Due to the strong support of the Korean government, Daewoo had gone from being a small trading company with registered capital of only US$10,000 to becoming an amazingly huge conglomerate in the space of thirty years. Its corporate structure was of intense interest to Chinese enterprises as it combined manufacturing industries with financial entities. As many saw it, Korea’s “eastern methods” were appropriate for and could be transplanted to China. Among policy makers and academic circles at the time in China, it was simply accepted common knowledge that China would be cultivating super-large enterprise groups that could rank within the Fortune 500. People felt that creating such “carrier ships” was the best way to prevail against international competition. At that time, such super-large conglomerates could be regarded as a symbol of China’s economic ascent.
The dream of entering the Fortune 500, and the so-called Daewoo model, pushed the wave of diversification to a new height. Every industry offered irresistible business opportunities. People could not wait to expand, and expand yet again. Entrepreneurs had not learned to curb their appetites and had to eventually suffer the consequences.
The phenomenon was most pronounced in the home electronics industry. After beating out competition from multinationals, local home electronics companies swiftly fell into a brutal form of “civil war.” The weapon used had to be price, since the level of technology of all these
In the mid-1990s, a group of muckrakers appeared and they specialized in exposing fake products or knockoffs.