(Yicai) Sept. 7 -- Despite the commendable efforts of Chinese firms to make the Fortune 500 list, the worship of Fortune 500 should end as many companies on the list are big but not strong or excellent.

The average revenue of companies ranked in the Fortune 500 list this year was USD81.9 billion, their average profit was USD5.8 billion, their average net assets was USD40.8 billion, their average return on sales was 6.8 percent, and their average return on net assets was 11.6 percent, according to statistics.

However, the average return on sales of the world’s 45,306 listed companies was 7.8 percent, and their average return on assets was 12 percent. The average return on sales and return on assets of the 632 world-leading companies that ranked in the top four in 158 industries were 17 percent and 14.8 percent, respectively. All these figures are higher than those of the Fortune 500 companies.

Fortune 500 firms have high but not high-quality revenue. Many of them are very likely to collapse due to the high risks they incur while pursuing high revenue. For example, China Evergrande Group had been on the list for many years, but it bankrupt this year due to excessive debts.

The 133 Chinese enterprises that made the Fortune 500 list this year had an average profit of CNY3.9 billion (USD533.7 million), an average return on sales of 3.9 percent, and an average return on assets of 8.2 percent. The figures are all lower than the global average and the average return on sales of 6.8 percent and return on assets of 8.9 percent of China’s 6,771 listed companies.

Sixty-six Chinese enterprises on the Fortune 500 list reported a return on sales of less than 2 percent and six suffered losses. Forty-three companies posted a return on sales of more than 20 percent, but all of them are banks, except for Tencent Holdings.

The profitability of financial firms in China is very high, while that of non-financial ones is relatively low. The average return on sales of the top 10 global non-financial enterprises was 43.6 percent, higher than Tencent’s 33.9 percent, the highest in China, and Contemporary Amperex Technology’s 9.4 percent, the highest among Chinese manufacturing firms.

We believe that only the top four companies in terms of the comprehensive index in their industries are leading, good, and world-class enterprises. In addition to firms undertaking special tasks in the national economy, the main body of world-class enterprises should be market-oriented, global, and highly competitive, especially listed.

We suggest that Chinese enterprises should not pursue revenue one-sidedly regardless of quality to make the Fortune 500 list and that government departments at all levels should not encourage them to do so by piecing together or with low efficiency. Instead, government departments should support Chinese firms to rank in the top four of their industries and those in the manufacturing and strategic emerging industries to rank as world-class enterprises.

From Chin@Moments

(The author is the chief expert of the Institute for Global Industry of Tsinghua University and a professor at Peking University)

Editor: Futura Costaglione