China surpasses Korea in corporate growth potential and profitability

China surpasses Korea in corporate growth potential and profitability. July. 06, 2016 08:33. by 김창덕기자 drake007@donga.com.

A report showed that Chinese companies surpassed their Korean counterparts in profitability, growth potential and the average size of assets. China “chasing” Korea has now become a thing of the past.

According to a report titled, “The Analysis of the Competitiveness of Korean and Chinese companies and Implications,” released by the Korea Economic Research Institute on Monday, all of the 2,288 stock-listed Chinese companies grew 7.66 percent year on year in terms of revenues as of 2014. This is more than double the revenue growth of 1,453 listed Korean companies of 3.39 percent.

Chinese companies surpassed their Korean counterparts in five out of eight indicators – operating margin (7.28 percent), average asset size (1.57 billion US dollars), the average number of patent applications (107.3) and average overseas M&As (7 million dollars). In particular, the average asset size of Chinese companies increased 2.4 times in seven years, up from 639.9 million dollars in 2007. During the same period, Korean companies increased only 26.9 percent from 1.15 billion dollars to 1.46 billion dollars.

Korean companies were better than Chinese companies only in three categories – the percentage of R&D, the percentage of overseas revenues and labor productivity.

“The drivers behind the rapid growth of Chinese companies include the government’s financial support and creation of funds for technological development and global M&A deals to absorb technologies and brands,” said Kim San-wol, an international studies professor at Kookmin University.