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China Briefings

Reports on China issued by Samsung Economic Research Institute

Engines for Sustainable Growth

Engines for Sustainable Growth

Samsung Economic Research Institute Beijing Office

Sept. 28, 2011

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Local companies have led the globalization of China . In this report, 19 listed companies were selected based on growth of annual sales and net profit for analysis, to provide lessons for the Chinese economy in its pursuit of sustainable growth. The selected companies vary and are from various fields, with the types ranging from state-owned and private companies to limited partnership and the fields encompassing infrastructure, real estate, pharmaceutical and home appliances.

The selected companies have achieved sustainable growth based on favorable external environments and unique corporate competitiveness. For the past five years, a growth-friendly environment was provided to those companies in infrastructure, real estate, healthcare and other markets with a rise in fixed asset investment and changes in consumption patterns. In addition, they built growth engines harnessing their competitive advantage which includes technology, brand power, management of distribution channels and innovation of business models.

Meanwhile, questions have been raised over the quality of growth. Some companies are too dependent on government policies, enjoying tax refunds and aid and lack the capability to continuously produce revenue and maintain sustainability. Others have accumulated enormous debt.

lthough the Chinese economy is forecast to experience inflation and wage hikes, putting a burden on the sustainable growth of Chinese companies, the selected companies are deemed capable enough to overcome such setbacks. They are expected to grow into competitive multinational companies, as they aim at overseas markets for the long-term based on their achievements and expertise.

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