Chinese Firms Enter the Ranks of Global Superstars

Caroline Freund (PIIE) and Dario Sidhu (PIIE)


Geographical distribution of top 4 firms, by industry, 2006 compared to 2014

Western corporations that dominated global industries until quite recently are increasingly facing competition from emerging-market economies, especially China. The last decade witnessed astonishing growth in China, with real GDP more than doubling between 2004 and 2014. Essential to this development has been the rise of Chinese firms into the ranks of the world's largest firms.

These charts, from a recent working paper by Caroline Freund and Dario Sidhu, highlight this shift in the global distribution of global superstar firms. They show the number of firms ranking in the top four by operating revenues for 84 industries, grouped by broad sectors and regions of the world. A key finding of this research is that global industrial concentration has been falling, in part because of the rise of large firms from emerging-market economies.

The change over the past decade has been striking. American firms have largely been able to hold their ground, with their share of industry leaders staying broadly constant. European firms, however, have been particularly affected. In sectors ranging from oil and gas extraction to the manufacture of metal products, large European firms are now outranked by fast-growing firms from China. Between 2006 and 2014, 29 European firms lost their top spots, many replaced by new industry leaders from China.

Perhaps the most striking example of this trend is civil engineering. In the first decade of this century, the international construction sector was dominated by firms from western Europe and Japan. By 2014, the four largest construction firms were all Chinese, and were all state-owned enterprises. 

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