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Headwinds for multinationals in ChinaHow are MNCs faring in the world’s
second largest economy?
Headwinds for multinationals in ChinaWhat are the prospects for MNCs in the world’s
second largest economy?
Some context…
• 2016 has smashed all records for outbound M&A from China
• However, growing signs of a backlash against Chinese takeovers (particularly by SOEs) in leading destination countries
• Further uncertainty on whether the Trump administration will follow through on campaign trade rhetoric
• Risk that trade-related tensions with China could deteriorate, and that MNCs active in the country will be caught in the crossfire
Background
• Which MNCs have built significant businesses in China?
• How strategically important is the Chinese market to them, and how much does it contribute to global revenue?
• Which MNCs are growing in China, and which are losing ground?
• What patterns, if any, can we observe by industry sector?
This document provides a top-down analysis and segmentation of 103
MNCs in China, by sector
Key questions
Leading MNCs in China: A possible segmentation
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10
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0 5 10 15 20 25 30 35 40 45 50
LFY Revenue growth (%)
Tech Industrials
Consumer
Financials
Healthcare
Materials
Energy
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: A possible segmentation
-60
-50
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10
20
30
40
50
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0 5 10 15 20 25 30 35 40 45 50
LFY Revenue growth (%)
China share of global revenues (%, LFY)
$10bn China revenue
‘Catching up’• 26 companies• $56 bn China revenue• $1.1 trillion market cap
Sustaining momentum as success attracts domestic rivals & govt. scrutiny
‘How much to commit’• 43 companies• $114 bn China revenue• $0.8 trillion market cap
Is China an untapped opportunity or a lost cause?
‘Can’t afford to lose here’• 22 companies• $195 bn China revenue• $1.3 trillion market cap
China is a strategically important market but sales are contracting. Are current challenges cyclical or structural?
‘Ride the dragon’• 12 companies• $82 bn China revenue• $0.4 trillion market cap
China drives global revenues & profits and the business is growing. What are the key success factors and are they sustainable?
Leading MNCs in China: Sector view – Consumer
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0
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30
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0 5 10 15 20 25 30 35 40 45 50
H & M Hennes & Mauritz Adidas
LG Electronics
NestléLear
Aeon Co.
Lotte
Fonterra
Fiat Chrysler
Daimler
Carrefour
Fast Retailing Co.
BMW
Tata Motors
SCASumitomo Electric
Panasonic
Sony
Sharp
Schaeffler
Wilmar International
RichemontPeugeot
LFY Revenue growth (%)
Food
Automotive
Retail
Apparel & accessories
Consumer Electronics
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: Sector view – Industrials
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0
10
20
30
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0 5 10 15 20 25 30 35 40 45 50
Sandvik
SK Networks
Daikin
Jardine Matheson
Boeing
Bombardier
Schneider Electric
San Miguel
Jardine Strategic Holdings
DKSH
Atlas Copco
Arconic
Sime Darby Berhad
A.P. Møller - Mærsk
Hyundai Glovis
AB Volvo
Rolls Royce
Komatsu Ltd
Toyota Tsusho
Philips
NidecACS
Emerson Electric
LFY Revenue growth (%)
Industrial Machinery
Electrical Equipment
Other industrial
Industrial Conglomerates
Aerospace and Defense
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: Sector view – Tech
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0
10
20
30
40
50
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0 5 10 15 20 25 30 35 40 45 50
Texas Instruments
Western Digital
TE Connectivity
SK HynixNokia
Avnet
Apple
Micron Technology
Jabil Circuit
Flex
Applied Materials
Intel
Samsung Electronics
LFY Revenue growth (%)
Equipment
Consumer tech
Semiconductors
Manufacturing services& distribution
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: Sector view – Materials
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0
10
20
30
40
50
60
0 5 10 15 20 25 30 35 40 45 50
Freeport-McMoRanCovestro
BHP Billiton
Rio Tinto
du Pont
Anglo American
Akzo Nobel
ArcelorMittal
Asahi Kasei
Siam Cement
Sumitomo Chemical
Toray IndustriesPOSCO
Mitsui Chemicals
Solvay
Mitsubishi ChemicalLinde
PTT Global Chemical
LG Chem
Stora Enso
Kobe Steel
Johnson Matthey
Huntsman
UPM-Kymmene
Vedanta
Vale
LFY Revenue growth (%)
Other materials
Paper Products
Steel
Metals and Mining
Chemicals
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: Sector view – Healthcare
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0
10
20
30
40
50
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0 5 10 15 20 25 30 35 40 45 50
AstraZeneca
Valeant Pharmaceuticals
Thermo Fisher Scientific Novo Nordisk
Medtronic
Merck
Danaher Corp.
Abbott Laboratories
LFY Revenue growth (%)
Pharmaceuticals
Healthcare Equipment
Life Sciences
China share of global revenues (%, LFY)
$10bn China revenue
Leading MNCs in China: Sector view – Energy
-60
-50
-40
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-10
0
10
20
30
40
50
60
0 5 10 15 20 25 30 35 40 45 50
JX Holdings
National Oilwell Varco
ConocoPhillipsS-Oil Corporation
Husky EnergyInter RAO UES
Transneft
LFY Revenue growth (%)
Oil and Gas Services
Oil and Gas Downstream
Oil and Gas Upstream
Energy other
China share of global revenues (%, LFY)
$10bn China revenue
Closing thoughts
• These slides are supporting materials for a LinkedIn article on MNCs in China: https://www.linkedin.com/today/author/0_3Xc4rjFiWgcf5xb5_mZjjV
• Analysis based on 103 MNCs with over $10bn in global revenue, and who disclose China revenue in their public filings
Echobox Limited is a Hong Kong based strategy consulting boutique. We work with MNC clients to support their critical business projects across the Asia Pacific Region
Please follow us on https://www.linkedin.com/company/echobox-ltd