The Era of Chinese Multinationals, based on the book published by Lourdes Casanova and Anne Miroux by Elsevier in 2020

1. EMERGING MARKET MULTINATIONAL REPORTS
The era of Chinese multinationals
Lourdes Casanova
Anne Miroux
Emerging Markets Institute

2. LourdesCasanova,Anne Miroux
http://bit.ly/bookchina
Casanova, L.; Miroux, A. Emerging Markets Multinationals Report. 2016-2017-2018- 2019.
ISSN 2689-0127 https://ecommons.cornell.edu/handle/1813/66953
Grateful to EMI research team: students, interns, volunteers, part-time researchers
2016: The China Surge
2017: Emerging Multinationals in a Changing World
2018: Reshaping Globalization
2019: Constructive Engagement
Themes: E20, M&A, Greenfield, price competition, Branding
Data Sources:
WB/IMF/UNCTAD/OECD/MOFCOM
Capital IQ, Bloomberg
FdiMarkets
Orbis
Factset
Fortune Global 500
Global Innovation Index

3. Casanova, L.; Miroux, A. 2019. Emerging Markets Report 2019. Building Constructive
Engagement. ISBN-13: 978-1-7328042- 3-4. ISSN 2689-0127 https://ecommons.cornell.edu/handle/1813/66953
3
1. The era of Chinese Multinationals
2. Revisiting China and the E20
3. The Global South: Chinese investments in Latin America and Africa
Special contributions: OECD development Center, EMRN (EMERGING MARKETS RESEARCH NETWORK) and Wuhan University
1. State capitalism or Technology Springboard by Limin Chen, Wuhan University, China
2. Mexican Multinationals by Evodio Kaltenecker & Miguel A. Montoya, EGADE/Tec de Monterrey, Guadalajara, Mexico)
3. Social Innovation in Latin America by Veneta Andonova, Juana García and Maria Emilia Correa, School of Management
Universidad de los Andes, Colombia
4. Korean Multinationals by Lorena Palacios and Jahir Lombana, Tec de Monterrey, Mexico and Universidad del Norte,
Colombia
5. Better business for 2030 – Putting the SDGs at the core by OECD Emerging Markets Network, OECD Development
Center
We invite you all to write in the 5th edition this year

4. Key themes
└ The global rise of Chinese firms has been rapid and dramatic
└ They are different from their Western counterparts
└ And have become formidable competitors: they break the ‘rules of
the game’
└ And are now venturing abroad aggressively: pull and push factors
└ So what should/can we do?

5. DRIVEN BY LOCAL ECONOMIC GROWTH, SCALE,
CAPACITY TO ABSORVE KNOWLEDGE

6. And SUPPORT OF OFDI (USD billions): Top world investors (2000-2010-2018) (red E20, blue G7)
Source: Authors’ analysis based on UNCTADstat, accessed by June 2019 in https://hdl.handle.net/1813/66978 .

7. Source: Authors based on 2019 Fortune Global 500 data 2005- 2019
Fortune Global 500: China catching up with the USA

8. Joining an exclusive group (red E20, Blue G7)
G7 269
E20 165
Other 66
Austria Belgium Denmark Finland Indonesia Luxembourg Malaysia
Norway Poland Sweden Thailand Turkey U.A.E.
Number of companies
One-company countries:
2
3
4
4
4
6
7
7
8
9
10
11
13
14
16
17
29
31
52
119
121
Saudi Arabia
Singapore
Mexico
Russia
Ireland
Italy
India
Australia
Brazil
Spain
Taiwan
Netherlands
Canada
Switzerland
South Korea
U.K.
Germany
France
Japan
China
U.S.
Only 21 countries with more than 1 company + 13 countries with 1 (17%)
Source: Authors based on 2019 Fortune Global 500 data
https://fortune.com/global500/2019/ accessed by August 2019
in https://hdl.handle.net/1813/66978 .

9. Establishing dominance across sectors even if they are young
Company # Company #
Citigroup
###
18
Industrial &
Commercial Bank https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
26
Credit Suisse
Group https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Switzerland.png
45
China
Construction https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
31
HSBC Holdings
###
47
Agricultural Bank
of China https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
36
BNP Paribas
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_France.png
48
JPMorgan Chase
& Co. ###
41
Fortis
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Belgium.png
51 Bank of China
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
44
2004 2019
Banks: Commercial and Savings
Company # Company #
Bouygues SA
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_France.png
194
China State
Construction https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
21
Vinci
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_France.png
234
China Railway
Engineering https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
55
Skanska AB
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Sweden.png
320
China Railway
Construction https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
59
Kajima
Corporation https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Japan.png
380
China
Communications https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
93
Taisei
Corporation https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Japan.png
386
Pacific
Construction https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
97
2004
Engineering, Construction
2019
Company # Company #
Anglo American
###
275 Saudi Aramco
https://cdn2.iconfin
6
BHP Group
https://cdn2.iconfinder.com/data/icons/world-f
341 Glencore
https://cdn2.iconfin
16
RAG
Aktiengesellschaf https://cdn2.iconfinder.com/data/icons/world-f
371
China National
Offshore Oil https://cdn2.iconfin
63
Pemex
https://cdn2.iconfin
95
China Energy
Investment https://cdn2.iconfin
107
2004
Mining, Crude-Oil Production
2019
Company # Company #
AXA
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_France.png
13 Ping An Insurance
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
29
ING Group
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Netherlands.png
17 Allianz
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Germany.png
45
Assicurazioni
Generali https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Italy.png
29 AXA
https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_France.png
46
Aviva
###
42
China Life
Insurance https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_China.png
51
MetLife
###
106
Japan Post
Holdings https://cdn2.iconfinder.com/data/icons/world-flag-icons/128/Flag_of_Japan.png
52
Insurance: Life, Health (stock)
2004 2019
Source: Authors based on 2019 Fortune Global 500 data 2005- 2019, https://fortune.com/global500/2019/ accessed by August 2019 in https://hdl.handle.net/1813/66978 .

10. Key themes
└ The global rise of Chinese firms has been rapid and dramatic
└ They are different from their Western counterparts
└ And they break the ‘rules of the game’
└ And are now venturing abroad aggressively
└ So what should/can we do?

11. A strong influence of the State (red China, Blue US)
89% of U.S. companies are publicly traded versus only 23 % in China, while 66%
es are state-owned or mixed versus only 1% of the U.S.

12. They tend to sacrifice margins (red China, Blue US)
Source: Authors based on 2019 Fortune Global 500 data 2018,2019, https://fortune.com/global500/2019/ accessed by August 2019 in
https://hdl.handle.net/1813/66978. The sectors are a classification provided by Fortune, which can change for some companies each year.
8.4%
4.5%
0 %
1 %
2 %
3 %
4 %
5 %
6 %
7 %
8 %
9 %
United States China

13. Key themes
└ The global rise of Chinese firms has been rapid and dramatic
└ They are different from their Western counterparts
└ And they break the ‘rules of the game’
└ And are now venturing abroad aggressively
└ So what should/can we do?

14. They compete on price
To dominate markets

15. Their cost structures are still low
Median salary of CEO of American 500 largest listed firms: USD13million
Median salary China USD167,578.75, in Beijing USD 335,115.63

16. They are
Innovating
(red China, Blue US)

17. Moving beyond price competition; improving in branding
Still lagging behind in brand recognition
Number of U.S. and Chinese companies in Fortune
Global 500 and brand value rankings, 2018
….
4%
15%
35%
40%
61%
45%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2019
China US Other
Share of China, U.S. and rest of the world in
Top 500 global brands, 2018
But things are changing

18. Key themes
└ The global rise of Chinese firms has been rapid and dramatic
└ They are different from their Western counterparts
└ And have become formidable competitors
└ And are venturing abroad aggressively
└ So what should/can we do?

19. Global Reach: Average number of countries in which companies from South Korea,
Japan, United States, E20 & China are present with Greenfield projects
Source: Authors’ analysis based on fDiMarkets

20. Announced FDI greenfield projects 2003-2019 (Million USD)
Source: Author’s information based on data from fDi Markets by Financial Times, accessed by August 20th, 2019 in https://hdl.handle.net/1813/66978 .

21. Main destinations /
capital in million US$ / share for the source
Main destinations /
capital in million US$ / share for the source
UnitedStates
uthKoreaChina
Japan
1.
2.
3.
4.
5.
6.
7.
8.
9.
China
India
Australia
United Kingdom
Canada
Mexico
Brazil
Japan
Saudi Arabia
251,836
122,875
115,571
106,574
81,439
79,655
55,023
43,049
41,193
14%
7%
7%
6%
5%
5%
3%
2%
2%
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Indonesia
United States
India
Nicaragua
Russia
Malaysia
Egypt
Philippines
United Kingdom
Pakistan
Vietnam
66,215
53,954
49,063
40,311
31,708
30,116
28,675
24,726
21,852
21,210
20,665
9%
7%
6%
5%
4%
4%
4%
3%
3%
3%
3%
1.
2.
3.
4.
China
Australia
United States
Vietnam
120,542
65,600
59,983
46,445
18%
10%
9%
7%
1.
2.
3.
China
Vietnam
United States
75,654
52,297
28,154
23%
16%
9%
Main country destinations of 50% announced greenfield investments U.S. versus China,
2003 to 2018 in fdiMarkets
Source: Author’s based on data from fDi Markets by Financial Times, accessed by August 20th, 2019 in https://hdl.handle.net/1813/66978 .

22. Top-20 companies U.S. & China in total of capital invested in greenfield
projects 2003-2018 (fdiMarkets)
Source: Author’s information based on data from fDi Markets by Financial Times, accessed by August 20th, 2019 in https://hdl.handle.net/1813/66978 .
1 Chevron Corporation 118,919 7%
2 ExxonMobil 76,554 4%
3 General Electric (GE) 33,211 2%
4 ProLogis 32,036 2%
5 Dow Chemical 27,592 2%
6 Intel 27,278 2%
7 Marriott International 27,093 2%
8 Amazon.com 23,381 1%
9 General Motors (GM) 20,987 1%
10 Starwood Hotels & Resorts 19,317 1%
11 Ford 16,822 1%
12 IBM 16,245 1%
13 AES Corporation (AES) 16,228 1%
14 Microsoft 13,105 1%
15 Coca-Cola 12,995 1%
16 Apache 11,695 1%
17 SunEdison Inc (MEMC Electronic Materials) 11,439 1%
18 Hilton Hotels (Hilton Worldwide) 11,026 1%
19 Citigroup 9,840 1%
20 Carlson Companies 9,355 1%
535,117 31%
Share
Total top-20
# Companies from United States
Million
US$
1 Hong Kong Nicaragua Canal Development Investment (HKND Group)40,000 5%
2 China National Petroleum (CNPC) 26,567 4%
3 China Fortune Land Development (CFLD) 26,405 3%
4 Power Construction Corporation of China (PowerChina) 21,985 3%
5 China Petroleum and Chemical (Sinopec) 18,483 2%
6 Shanghai Greenland Group 17,274 2%
7 CITIC Group 11,944 2%
8 Dalian Wanda Group 10,873 1%
9 Hutchison Whampoa 10,501 1%
10 Shanghai Electric 9,078 1%
11 Huawei Technologies 8,485 1%
12 China Communications Construction Company 7,434 1%
13 Sany 7,262 1%
14 Power Asset Holdings 6,870 1%
15 Cosco 6,668 1%
16 Zendai Group 6,400 1%
17 China State Construction Engineering Corporation (CSCEC) 5,493 1%
18 China Huaneng 5,306 1%
19 China Huadian Corporation 5,171 1%
20 China Gezhouba (CGGC) 5,124 1%
257,322 34%
Share
Total top-20
# Companies from China
Million
US$

23. China’s outward announced greenfield FDI (Asia and EMs markets)
Industry 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Grand Total
Real estate 1.5% 1.7% 0.0% 15.3% 15.2% 31.4% 9.6% 44.5% 12.1% 14.3% 19.5%
Coal, oil & gas 30.7% 9.6% 21.4% 1.5% 3.2% 10.5% 24.4% 10.6% 8.2% 12.8% 12.5%
Renewable energy 7.9% 9.7% 8.1% 22.3% 2.2% 8.4% 15.3% 5.3% 4.8% 26.3% 10.7%
Metals 11.9% 16.9% 28.1% 6.7% 7.5% 9.2% 14.0% 3.0% 11.8% 6.9% 9.8%
Business services 0.8% 0.8% 0.5% 0.7% 45.5% 0.3% 0.5% 1.3% 0.4% 0.3% 6.9%
Automotive OEM 13.9% 15.5% 7.4% 11.4% 3.0% 8.4% 3.3% 2.7% 7.7% 2.5% 5.6%
Communications 3.3% 7.9% 7.6% 2.3% 2.6% 6.0% 3.5% 3.3% 4.2% 3.1% 4.0%
Chemicals 0.5% 3.6% 0.8% 2.9% 1.8% 3.1% 0.4% 0.5% 13.7% 3.5% 2.9%
Hotels & tourism 5.8% 2.3% 1.0% 11.6% 3.7% 1.3% 5.2% 0.9% 0.1% 3.3% 2.9%
… … … … … … … … … … … …
… … … … … … … … … … … …
Other 3.6% 10.0% 7.6% 4.4% 2.6% 2.6% 5.8% 4.8% 12.9% 7.2% 5.7%
Total
100.0
%
100.0
%
100.0%
100.0
%
100.0%
100.0
%
100% 100.0% 100.0% 100.0% 100.0%

24. Announced outbound M&A deals (countries bases on biggest OFDI)
0% 1%
2%
2%
2%
4%
3%
2%
6%
9%
11%
9%
11%
13%
8% 9%
20%
16%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
U.S. Japa n Canada U.K. France China Switzerland Germ any Netherlands Irela nd
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
China U.S. Korea India Russia Mexico Brazil Malaysia
2000-2008
2009-2018

25. U.S. and China M&A by Sector
Energy, 3% Consumer Staples,
3%
Other, 4%
Financials, 4%
Health Care, 5%
Communication
Services, 8%
Utilities, 9%
Industrials, 9%
Consumer
Discretionary, 11%
Information
Technology, 11%
Materials, 13%
Real Estate, 20%
Energy, 2% Other, 2%
Utilities, 3%
Consumer Staples, 3%
Materials, 8%
Communication
Services, 9%
Consumer
Discretionary, 9%
Financials, 11%Industrials, 12%
Health Care, 12%
Real Estate, 13%
Information Technology, 14%

26. Europe and U.S. top destination of M&A (unlike greenfield)

27. Problems with the DATA: Which one to choose: Capital IQ
Methods:
• Method 1: Current method, based on ultimate parent of both buyer and target company (including cancelled deals)
• Method 2: Current method, based on ultimate parent of both buyer and target company (excluding cancelled deals)
• Method 3: Taiwan excluded, using current method (excluding cancelled deals)
• Method 4: Previous researcher’s screen criteria; based on headquarters of countries (excluding cancelled)
Year Method 1
(announced)
Method 2
(announced-
cancelled)
Method 3
(announced-
cancelled)
Method 4
Previous RA
NATIXIS
(announced)
NATIXIS
(announced-
cancelled)
Incl. Taiwan Incl. Taiwan Excl. Taiwan
2013 39.3 30.1 30.2 63.6 40-45 35
2014 40.5 35.1 34.6 79.8 35-40 33-36
2015 67.9 38.9 38.7 88.3 55-65 47
2016 122.4 83.8 83.6 204.7 160 90
2017 86.7 59.8 57.7 131.3 70-80 105
2018 48.8 28.3 27.5 68.2 65-75 55
2019 74.1 31.6 28.2 50.5 45 28-33

28. Four case studies: ICBC, State Grid, Tencent and HNA
biggest bank in the world by assets, present in 47
countries and territories
powering China and the world, major investor in Brazil,
$347bn Enel $85.28bn EDF $77.8bn, GEIDCO project
an innovative tech giant, WeChat pay (with AliPay)
behind mobile payments success in China, investing in
online banks, 1bn users, Facebook 2.5 billion
Successful conglomerate, with too many acquisitions

29. ENEL
US$85 bn
TEPCO
US$55 bn
EDF
US$75 bn
State Grid Corporation of China
US$347 bn
Top Power companies in the world
(2019 revenues, US$ bn)

30. Key themes
└ The global rise of Chinese firms has been rapid and dramatic
└ They are different from their Western counterparts
└ And they break the ‘rules of the game’
└ And are now venturing abroad aggressively
└ So what should/can we do?

31. Economic Model:
Long vs Short Term
Competition continues
Low price points
Source of knowledge
& innovation
Opportunity
Learning
Key Messages
Government policies, economic growth, scale, Capacity to absorb knowledge
companies’ growth

32. The ‘Day After’
└ Economic Growth: increase of GDP around 2%
└ Companies: Will the domestic consumption replace foreign?
Regarding internationalization, refocus on Emerging Markets?
└ Wil trade war worsen?
└ More flexible and resilient Global Value Chains
└ Following what is happening in Italy, Spain and other EMs will China
improve its soft power in the world?

34. Upcoming book:
From Copycat to Leaders: Innovation from
Emerging Markets. Cambridge University
Press 2020 (editors)
Grateful to EMI research team: students, interns, volunteers
Casanova, L.; Miroux, A. 2019. The Era of Chinese
Multinationals: How Chinese Companies Are
Conquering the World. Academic Press. Elsevier.
http://bit.ly/bookchina Paperback
ISBN: 9780128168578 eBook ISBN: 9780128170601
https://ecommons.cornell.edu/handle/1813/66953