By Lourdes Casanova and Anne Miroux

May 16, 2020

*This blog is based on the findings of the book: Lourdes Casanova and Anne Miroux, The Era of Chinese Multinationals – Competing for Global Dominance, Elsevier Academic Press,

The New Millennium has seen the consolidation of China’s global economic and geopolitical power. A vivid illustration of this phenomenon is the increasing presence of Chinese multinationals all over the world, a distinct feature of the last decade. The Global Financial Crisis (GFC) of 2008 provided the opportunity for Chinese firms to substantially increase their global footprint. By the end of 2019, there were roughly as many Chinese firms in the Fortune Global 500 list (119) as U.S. firms (121); ten years earlier, the ratio was about 1:4.

As shown in our book “The Era of Chinese Multinationals: competing for global dominance” (Casanova and Miroux, 2020), the global ascension of Chinese firms directly paralleled China’s economic growth, its transformation into an economic powerhouse, and its evolving institutional and policy context. Chinese firms rapidly gained scale by leveraging the growing Chinese economy and its huge domestic market. Chinese government policies, which actively guided and encouraged  outward foreign direct investment (OFDI), have also played a crucial role. Hence, the rise of Chinese multinationals is a result of a combination of macroeconomic measures and efforts at the firm-level.

The Global Financial Crisis of 2008 was a turning point in the rise of Chinese firms allowing them to acquire financially distressed firms in advanced economies. Worldwide, foreign acquisitions by Chinese firms peaked in 2016, surpassed that year only by firms from the U.S.A. Many of those deals were of a size unimaginable a decade earlier. ChemChina bought Syngenta (2016), the Swiss chemical giant, and the Italian tire maker Pirelli; Lenovo acquired the IBM PC manufacturing subsidiary in 2005 and Geely, part of the Swedish firm Volvo in 2005, demonstrating their increased sophistication and scale. For a country, that for much of the 20th century, was low income and based on a mostly rural agrarian economy, such acquisitions had an extraordinary symbolic value. They highlighted a new reality. Today, Chinese multinationals have expanded all over the world, including developed markets; and most importantly, their outbound expansion is no longer confined to traditional sectors such as energy, raw materials and heavy industries, but increasingly includes services-based and consumer-related sectors.

Chinese firms’ global ascension fundamentally disrupts the global competitive landscape. As we have covered in Cornell University’s Emerging Markets Institute reports, Chinese firms used to be seen as competing through lower prices. While this is still the case in many sectors, price differentials have been narrowing in some areas, and Chinese firms have started to offer high-priced items in some product segments including computers and smartphones. In the same vein, Chinese firms have also improved their brand recognition ladder, with the information technology provider Huawei, the technological conglomerate Tencent, and the bank ICBC now featured among the top global brands. In 2019, about 14% of the 500 top global brands were Chinese (as compared to 4% in 2019). In part, this change reflects the increasing consumer power of emerging economies, where firms from China are comparatively well positioned, given their experience and familiarity with these markets. But the increased brand recognition of Chinese companies has not been limited to emerging markets.  The advertising presence of Huawei and the white goods manufacturer Haier in the UK press and other media, on billboards in iconic locations in France, or major TV channels in Switzerland all show how these firms are working at building their global brands.

Innovation is another area of focus for Chinese firms, in line with the overall objective of the country to transform into an innovation-driven economy. On average, an innovation gap remains between Chinese firms and their developed country peers; for instance, based on the 2018 EU Research and Development (R&D) investment scoreboard, which provides data for the top 2500 largest R&D company spenders, Chinese firms devote on average less than half of what U.S. or European Union firms spend on R&D. Yet, an increasing number of Chinese firms are among the top corporate R&D spenders in the world: about 12% of the top 500 R&D spenders in 2019 were Chinese firms, compared to 3% in 2010. The progress made in quality and innovation is increasingly visible in a number of technological domains where Chinese firms are either leading or near the very top – mobile payments, artificial intelligence and electric vehicles for instance. Alibaba (Alipay) and Tencent (WeChat Pay) are examples of Chinese leadership in mobile payments that can challenge their best competitors in developed markets, thereby raising the bar for global competition.

The 2020 COVID-19 pandemic is challenging the global economy in unprecedented ways. China first felt the brunt of COVID-19 and, at the time of writing this blog, the country has started the process of emerging from it. While the economic consequences of the pandemic are yet to be fully understood, the world should be watching the actions of Chinese firms carefully. Chinese firms emerged stronger and more global after the last financial crisis in 2008. Will they repeat this scenario and become even stronger and more globally resilient after the current COVID-19 crisis? “Too soon to tell’ the saying goes. It applies today more than ever.

*Lourdes Casanova, Gail and Rob Cañizares Director, Emerging Markets Institute,

Anne Miroux, Faculty Fellow, Emerging Markets Institute,

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