There is this popular joke that goes like this: if you clone yourself four times, one will be Chinese! That says it all about the manner in which the world perceives the Chinese – populated and copycats. No doubt, China has become overpowering and has integrated itself into the lives of people all across the globe by their sheer human power and the power to produce goods and services at an unprecedented pace and volume. So much so that from Greenland to Antarctica, and from Middle East to Europe, if one were to try and search the origin of the products used in these countries on a daily basis, in all probability the ‘origin’ would turn out to be China. Be it your cell phone or the laptop, or even the engine of your car, everything turns out to be made in China. An original iPhone or even its look-a-like (with similar or more features), both are made in China. In fact, all this is known. But what is mostly unknown is the might that the Chinese have garnered today with their home grown products and brands. Not only is China manufacturing almost all goods for Western companies, but it also has gained a huge momentum with its own domestic production.

Today, Chinese companies are not only topping various global lists in terms of revenue, market share, size and scale but are also acting as alternatives – or even better replacements – for western products within and outside China. Today, the Chinese have a “Made by China” option with similar features and quality for almost every known western brand, which are also anyway made in China.

Against the populist perception of China being a nation of cheap-labour export and copycats, China has emerged as one of the most innovative nations as well! When one goes to a top designer store in America or to the Disney Stores in Disneyland, it’s all made in China; totally dispelling the myth that Chinese products mean coarse or low quality fakes. Everything, everywhere seems to be made in China, especially in the West. So much so that when post 9/11, the Americans had their national flag flying up and about almost everywhere, it was found that most of these flags had been made in China!! Obviously, as an Indian, it hits you hard since there is absolutely no such concept like “Made in India”, though as a nation we have some of the best talent, many of whom are even running the world’s topmost companies now. That is why when Hillary Clinton comes to India and gives a motivation pill to Indians that they should look at a parallel role in this region along with China, and when the Indian media goes ga-ga over that, I feel like rolling with laughter! One reason why I started writing on China since the previous issue – and plan to write often – is so that Indians know where we could have been and where we are, shamefully. This piece actually doesn’t merit an Indian mention at all – so much is the Chinese superiority when it comes to “Made in China” as well as “Made by China”!

In the latest World Intellectual Property Indicators 2010 (WIPO) report, China figures as the third largest nation in terms of patent applications. China has applied for 203,481 patents in 2009 and around 492,008 between 2003 and 2007. To further their entrepreneurial endeavours and strengthen indigenous companies, the Chinese government launched an “indigenous innovation” scheme and further declared it a national priority in 2006. This whole program was aimed towards encouragement of technological innovation in Chinese domestic firms and motivating them to own their proprietary Intellectual Property rights. Moreover, all science and technology based production has been continuously aided with huge tax incentives, credit facilities and budgetary support. On top of that, the products thus developed under the “indigenous innovation” program also featured as a priority in government procurement list. A 2010 US Chamber report titled ‘China’s drive for indigenous innovation’ states how China has climbed the ladder swiftly and made itself prominent in the field of science and technology. The Thompson Reuters Science Citation Index (CSI) placed 122,998 Chinese scientific papers in 2009 thus making them the third largest contributor. China also features as the largest contributor in the areas of engineering, genomics and nanotechnology.

Let me start the China story with an interesting anecdote. All those who followed the Beijing Olympics closely would have surely been impressed by former Chinese gymnast Li Ning, who lit the cauldron during the opening ceremony. But then, knowledge about the fact that this 45-year old, triple gold medalist of the 1984 games is actually the founder and owner of China’s biggest sporting goods manufacturing company named Li Ning Company Limited is quite limited. Li Ning Co. is not only the biggest in China, but also has stores across the globe. During the 2008 Olympics, the company sponsored many sporting teams, besides sponsoring the Chinese teams. Today, it is the biggest competitor to Adidas and Nike in China and clocked in revenues of a staggering $1.354 billion last year. As per China Market Research Group Survey 2009, Li Ning and Adidas both had a 14 per cent market share in China, which was just 3 per cent behind the market leader Nike.

Well, that was just one example to indicate what the Chinese are capable of. On a macro level, it is a well established fact that no economy can flourish without a formidable financial sector. And Chinese banks have acquired monstrous proportions when compared to their western counterparts. The Industrial and Commercial Bank of China Ltd (ICBC) is one of the strongest pillars of the Chinese industry and this is evident from the fact that it’s the 7th biggest public company in the world, as per the Forbes list 2011. The top four banks of China – ICBC, People’s Construction Bank of China, Bank of China and Agricultural Bank of China – manage around 80 per cent of Chinese financial portfolio. These banks are the biggest banks globally in terms of their market capitalization and today feature among the top five banks on most of the global lists. ICBC today has over 200 million customers and over 6000 branches all across the nation. Compare this with HSBC, which has 100 million customers worldwide! While the Construction Bank of China deals in credit for property and real estate, it also controls China’s multi-billion dollars foreign reserves. All in all, there are over 100 commercial banks in China. In 1998, numerous commercial banks of China were asked by the government to lend money and provide credit to state-owned enterprises while small credit cooperative banks were instructed to help private companies with credit facilities to step up their production facilities. Thanks to Chinese banks, today most of their home grown companies stand tall against any foreign competition – both within and outside China. What’s more, the market share of foreign banks was a mere 1.71 percent in 2009, which rose to 1.83 in 2010.

This strong financial pillar and a credit regime with low interest rates have allowed many industries to thrive. One of them being the Chinese automobile industry. The thirst of China’s automobile demand is well fulfilled by over 45 Chinese automobile manufactures. Today, China is the largest car market and most of the cars manufactured in China are consumed by the country itself, thus leaving a very small fraction for exports. Domestic Chinese auto-manufactures like Chery, BYD, Shuanghuan Noble and a few others are the most sought-after Chinese brands. Not only because they are one of the leading manufacturers, but because they are also China’s answer to the Toyotas, Hondas, Mercs, GMs, and the Porsches of the world. So much so that these companies have been sued by many global brands for copying their designs (yes, their designs look similar to those of Mercedes and BMW; but then, designs are not protected by patents and this much of a design inspiration is indeed fair for the developing world when it comes to coming at par with the developed world of today, which even today fights the bloodiest of unethical wars wherever it can smell money). China Association of Automobile Manufacturers (CAAM) in its 2010 report declared Shanghai Automotive Industry Corporation (SAIC) as the largest auto manufacturer selling over 3,558,400 cars in just one year.  SAIC is followed by Dongfeng, FAW, Changan and Beihing Auto. Domestic car manufacturers control over 85 per cent of total car market in China. China’s top ten companies sold over 15 million cars in 2010. These companies make all types of cars ranging from low cost cars to high end cars. What more – Toyota, Honda, Nissan and Hyundai are sitting on a mere 6 percent market share each, and that too on account of the fact they have local Chinese manufacturing tie-ups.

Coming over to aviation – China’s domestic airline Air China is one of the biggest and the largest airlines carrying over 60 million people in 2010. On a global scale, it is one of the most profitable airlines in the world with a net profit of $1.83 billion in the year 2010. It connects China to almost all parts of the world viz. South America, Europe, Asia, middle-east and North America. Supporting this airline is the China Southern Airlines which flew 76.5 million passengers in 2010 thus becoming the world’s fifth largest and Asia’s largest airline in terms of passenger carried. The airlines marked a profit of $883 million in 2010. The third in the list (and in the Chinese skies) is China Eastern Airlines which is the biggest and most-connected airline in China. Carrying 64.93 million passengers, the airlines netted a profit of $807 million in the year 2010. Along with passenger airlines, China has also developed fleets of cargo airline companies. China Cargo Airlines, Great Wall Airlines and Shanghai Airlines are three big cargo companies that had made China self-sufficient in transporting cargo across the world.

With its 1.3 billion population, China makes a goldmine for retail giants. This huge consumer base literally made global retail giants salivate and forced them to enter China.  When Carrefour, Walmart and Tesco were all queuing in to enter China, a Chinese retail giant was already waiting to welcome them. One of the China’s biggest retail chains, Wumart Stores (phonetically similar to Walmart), started their operations in 1994 led by Zhang Wenzhong; today, the chain has over 500 stores in China. Trying to match Walmart – which today has over 300 stores and 90,000 employees – Wumart is on a massive expansion spree and has managed to achieve an annual sale of $2 billion. This is $5 billion less than Walmart in China – but then, given the fact that retail is clocking an 18 percent growth, Wumart could well bridge this revenue gap soon. Then there are hyper-marts like Bailian and Hualian, which operate on the same model. Even in the white goods market, the Sonys, LGs and Samsungs of the world get dwarfed in China. China’s home-brand Haier today has made its presence across the world. After being the most coveted brand in China, it’s now all set to market itself strongly in the global markets too. Obviously, it has topped all lists, indexes and surveys that define superlatives in China but today is also the 4th largest white goods manufacturer worldwide. Started in 1920 as a refrigerator factory, it went on to become a $6.31 billion (40.6 billion Yuan) company by early 2000. Last year, it declared a sales revenue of $20.9 billion (135 billion Yuan) and today manufactures an array of white goods with manufacturing units dotted all across the globe! In 2010, the Euromonitor International ranked Haier as the number one brand of white goods in the world with 6.1 percent of the retail market share. Haier is also in the process of consolidating various domestic white-goods enterprises and is also building industry parks in order to ease international acquisitions. Sharing the market is TCL Corporation with revenues over $7 billion. Currently Eros group is spearheading the promotion and brand building exercises of TCL in the Middle East. TCL for that matter is one of the leading brands in China and also is spreading its tentacles in other Asian nations too!

Amidst all these, one of the most significant sectors, which is another backbone for the Chinese growth story is energy. China not only boasts of having a couple of massively huge petro-chemical producing and refining companies, but is also one of the largest oil consumers in the world. For that matter PetroChina is the biggest oil producer in China and also features prominently in global 500 lists of biggest oil producing companies. PetroChina recorded revenues of $221.57 billion in 2010.  In the first quarter of this year, it produced 219.1 million barrels of crude oil and processed 250.1 million barrels of crude oil. Fortifying the sector is the parent company of PetroChina, namely China National Petroleum Corporation (CNPC). CNPC is the largest oil and gas producing company in China and the second largest in the world. But surpassing this all is the behemoth of Sinopec – the Chinese energy giant, which is also the highest ranking Chinese company in the Fortune 500 list. Sinopec recorded revenues of $297.33 billion (1,913 billion Yuan) last year. Sinopec imports and exploits petroleum products craftily – 20 years back, Sinopec was the world’s 5th largest oil producer and exporter, while in a sharp contrast today, it is the second biggest importer!

Keeping almost everything at bay, an economy in the 21st century is deemed powerless without a strong information technology backbone and a stronger information technology control. China has always been the favourite destination for outsourcing of technological services but today it is giving steep competition to those very companies that a couple of decades back had entered China with an intention of making their presence felt. Take for instance Huawei Technologies, the largest networking and telecommunications equipment manufacturing company of China. Huawei along with being the largest in China has its presence across the world. Today, it is the third largest mobile telecommunication company in the world competing with the likes of Ericsson and Siemens, apart from being a company that has access to detailed information of internet usage patterns across the globe as an add on. Huawei declared revenues of $28 billion in 2010. It is also the second largest telecom equipment manufacturer and the largest network equipment maker as per 2011 rankings. The company has over 17,000 patents and also features as one of the World’s Most Respected 200 Companies, in Forbes 2007 lists. Huawei upgraded itself to be a part of the World’s Most Influential Companies listing in Businessweek in 2008.  Extending the market is China’s leading mobile brand – China Mobile Limited. With more than 600 million subscribers, it is the largest mobile phone service provider of the world. Its reported revenues in 2010 was $73.366 billion. China Mobile has more than 70 per cent of Chinese total market under their kitty followed by China Unicom (revenue of $23.2 billion) and China Telecom (revenue of $34.16 billion).

Taking the league forward, China has been giving stiff competition to western technological products – if not worldwide, at least in China. As per the data released by market research firm IDC, at the end of fourth quarter of 2010, the Chinese PC maker Lenovo topped in terms of market share in China (around 32.2 per cent). Though globally, it has a market share of around 10.2 percent, Lenovo has a strong hold on its home turf with the closest competitor being Acer, Dell and HP – all of them having almost equal market shares i.e. 7.8, 7.5 and 7.4 percent respectively. Lenovo’s worldwide revenue in the fourth fiscal quarter (Jan-March 2011) amounted to $4.8 billion – the revenues generated inside China accounted for $2.2 billion, almost 50 per cent of the total revenues, an impressive growth rate of 13 percent on an year-over-year basis. Lenovo also gained the  rights to use IBM’s ThinkPad and Think Centre trademarks in 2004 for five years which provided them with a well-recognized brand in the developed world in exchange of low-cost manufacturing in China.

Today, Lenovo is an answer to all personal computer brands in China and even worldwide. The company has emerged now as the 449th largest company in the Fortune 500 list, after having been just an OEM a few years ago. Moving from Lenovo to Google; a year back, the news about Google’s exit from China made waves – but then it made little difference to the Chinese market. Globally, Google with a market share close to 86 percent (as per global website traffic reported by SeoMoz, Compete, Nielson-Net, Alexa and Karma Snack), almost enjoys a monopoly as far as the search engines market is concerned;  Yahoo comes a distinct second with a market share of around 6.5 per cent. The situation in China is completely the opposite – as per data pertaining to Q2 search engine market share by revenue (2011), Google China plays second fiddle to Baidu, which has a market share of 75.9 per cent while Google has a market share of 18.9 percent. Baidu’s revenue in the second quarter of 2011 (April-June 2011) soared to $531.56 million (3.42 billion Yuan) – a 78 per cent rise over the last quarter. Similar is the case with Microsoft in China. Microsoft’s acquisition of Skype has meant that now they control around 68 per cent of the instant messaging market as per OPSWAT’s latest Q2 2011 report. But in China, QQ (an instant messaging product by a Chinese company Tencent) has a market share of around 77 per cent (more than the worldwide market share of Skype), whereas MSN has a market share of around five per cent, ranking fourth in China. To top it all, China’s Tianhe-1A also became the fastest supercomputer surpassing Cray Jaguar (located in Tennessee).

Beating the West in almost all sectors and answering them in their language, China has come a long way in creating replacements for all the biggest American and European giants. Once tagged as a mere one-stop manufacturing solution, China today has emerged as an innovator. With a  myriad of patents, acquisitions, joint ventures and indigenous design & technology developments, China is all set to change the way the West does business in the mainland, if not in the world – to say the least. What more, commonly known as China Cola in the West, Future Cola manufactured by Hangzhou Wahaha is giving tough competition to Pepsi and Coca Cola within China today. And ‘country style cooking’ – a Chinese restaurant chain, modeled on KFC – has recently got listed in NYSE!

In fact, government support and access to easy credit has allowed Chinese budding companies to become the world’s biggest and challenge the premiers. This is unlike India where, post liberalization, hundreds of Indian companies got buried in history. Today, Chinese brands have become so strong and visible and convincing (in terms of quality and standard), that an average Chinese prefers Chinese brands over a Western one. Today, walking into Wumart, purchasing Haier, driving Roeve, flying Air China, using Lenovo and searching on Baidu is seen as being nationalist and globalised too! If numbers tell it all, then there are 61 Chinese companies in the  Fortune 500 list of 2011 (behind US with 133 and Japan with 68) with  the Chinese company Sinopec at no 5! Do I need to say more?