Origins and Growth of Big Businesses in China

Chapter 3 elaborates on the origins of large businesses, particularly business groups, which have been leading the economic catch-up in China. The majority of firms listed on the stock markets in China are business groups, which are comparable to their counterparts in Japan (keiretsu) and in Korea (chaebols). However, the chief differences between large business groups in China and those in Korea and Japan are that the former are less diversified and are owned by the state, not by particular families (as in Korea) or commercial banks (as in Japan). Chinese business groups typically maintain a vertical structure, with the core company at the first tier and closely related companies at the second tier. Their performance in the 2000s also had strengths (high growth) and weaknesses (lower profitability) similar to those in neighboring countries, such as chaebols in the 1990s in Korea.