Internet companies suffered a failure, and the ranking of e-commerce in China and the United States both declined, reshuffling? Latest Fortune Global 500 net profit released | Company | Released

On August 2nd, the latest Fortune Global 500 ranking was released. The total operating revenue of this year's Fortune Global 500 companies is about 41 trillion US dollars, an increase of 8.4% compared to the previous year. The threshold for entering the ranking has also increased from $28.6 billion to $30.9 billion. However, due to the global economic downturn, the total net profit of all listed companies this year decreased by 6.5% year-on-year, to approximately $2.9 trillion.

From the perspective of technology, Amazon, which once jumped to second place last year, has fallen to fourth place, while Apple has fallen from seventh place last year by one place to eighth place.

The top ranked Chinese technology companies include Hon Hai Precision, JD.com, China Mobile, Alibaba, Huawei, China Telecom, Tencent, etc., all of which have experienced a certain degree of decline in rankings compared to last year. Huawei's ranking has dropped by 15 places this year, dropping out of the top 100; Xiaomi, which ranked 266th last year, has fallen 94 places to 360 places this year; Gree, the leading white electric company that has been listed multiple times, has fallen out of the list this year. In addition, Chinese advanced manufacturing company Lixun Precision has made its debut on the list.

This year, the number of Internet companies on the list increased to 8, with China and the United States accounting for half of the total, respectively: Amazon, Alphabet, JD, Alibaba, Meta, Tencent, Meituan and Uber. Meituan and Uber are both on the list for the first time. However, it is worth noting that among the top six Internet companies, except Alphabet, which ranked flat, the rest fell in the rankings this year.

These technology companies are the most profitable

The ranking list released by Fortune this year classifies all enterprises according to their business fields. The 135 enterprises in Chinese Mainland belong to 15 business fields, of which only 4 fields have sales returns of more than 5%, namely, finance, transportation, telecommunications and high-tech fields.

Despite the overall decline in profits among the Fortune 500 companies, there are still many technology companies achieving significant profit growth. The list shows that there are three technology companies in the top five of the profit list: Apple ranks second on the profit list, with profits exceeding 99.8 billion US dollars; Microsoft's profit increased by 11.4 billion US dollars year-on-year, rising to third place on the profit list with a profit of 72.7 billion US dollars; Google's parent company Alphabet ranks fourth on the profit list.

Among the aforementioned technology companies, although Apple's ranking has dropped by one place, it has become the world's first company with a market value exceeding $3 trillion this year. Microsoft's ranking has risen by three places compared to last year, and with its investment and cooperation in OpenAI, its market value has skyrocketed, making it an important player in the field of big models. The ranking of Google's parent company Alphabet remains unchanged from last year, but profits have decreased compared to the same period last year. In the wave of generative artificial intelligence, Google and Microsoft are engaged in a fierce arms race.

Among Chinese technology companies, Tencent, TSMC, and China Mobile have also become the top ranked companies in terms of net profit. Among them, TSMC achieved a net profit of 33.3 billion US dollars last year; China Mobile's profit last year was about 17.5 billion US dollars, a year-on-year increase of 8.2%; Tencent's net profit has decreased by 19% compared to last year, but it still ranks among the top with a net profit of over 27.9 billion US dollars.

On the profit margin list, TSMC ranks third with a profit margin of 43.9%, and its overall ranking has risen by more than 50 places this year. The top ten companies in China with high profit margins, except for TSMC and Tencent, are all commercial banks. Tencent President Liu Chiping previously stated that compared to the past, Tencent is gradually becoming a more cost conscious and efficient mature company, hoping that the company's profit growth can be greater than or equal to revenue growth.

On the list of return on equity, Home Depot jumped to the top with a return on equity of over 1095%, while Apple ranked second with a return on equity of over 140%. Chinese technology companies ranked high in terms of return on equity, including TSMC, Lenovo Group, Tencent, Midea, Lixun Precision, and CATL.

Both China and the United States have experienced a decline in e-commerce rankings

Among the 8 Internet companies listed in China and the United States, 3 are e-commerce companies. Amazon, JD.com, and Alibaba, the three e-commerce companies mentioned above, have seen a decline in their rankings this year.

Amazon ranked 4th and 2nd last year. This company has been continuously reducing costs and increasing efficiency since the beginning of this year, and announced the largest layoff in its history in early January. In the first quarter of 2023, Amazon's net sales increased by 9% to $127.4 billion, the same growth rate as the previous quarter. The sales of the North American division increased by 11% year-on-year to $76.9 billion, while the international business sales increased by 1% year-on-year to $29.1 billion.

In terms of domestic e-commerce companies, JD and Alibaba's rankings have also declined compared to last year. Among them, JD.com ranked 52nd, up from 46th the previous year. Alibaba ranked 68th and 55th last year.

JD has undergone significant adjustments in the past six months. On May 11th, Xu Lei, former CEO of JD Group, resigned from the company due to personal reasons, and the position of CEO will be taken over by Xu Ran, CFO of JD Group. From a performance perspective, since November last year, JD.com has entered a phase of multiple adjustments, from retail strategy to personnel structure. The latest financial report shows that JD.com is currently in a painful period of adjustment.

Alibaba has also undergone significant organizational changes this year. In June of this year, Zhang Yong, Chairman and CEO of Alibaba Holding Group, announced through a letter from all employees that Alibaba's self transformation is progressing smoothly and steadily. A new business cluster of 1+6+N has basically taken shape, and the boards of directors of various business groups have begun to operate. Multiple business listings and financing plans have also been launched. The holding group will mainly assume the role of innovation incubation headquarters, with Cai Chongxin, who has an investment background, serving as the Chairman of the Alibaba Holding Group's Board of Directors.

In addition, Meituan made its debut on the list, ranking 467th. Last year, Meituan's revenue was 220 billion yuan, a year-on-year increase of 22.8%, and its operating loss was 5.82 billion yuan, a year-on-year decrease of 74.8%. In the first quarter of this year, Meituan achieved a turnaround in performance, with a operating profit of 3.58 billion yuan in the first quarter and a operating loss of 5.58 billion yuan in the same period last year.

In terms of business adjustment, in March of this year, Meituan's ride hailing business abandoned its self operated taxi service and turned to an aggregation model, and began launching takeout services in Hong Kong, China. At present, it is competing fiercely with byte system Tiktok in the field of local life services.

New Challenges for Electronic Consumer Enterprises

In this year's Fortune 500 list, some technology companies, after experiencing explosive growth during the pandemic, are now facing new challenges.

During the epidemic, there was a strong demand for electronic consumer products, which once drove the global sales of products from technology companies such as Apple; After the epidemic, consumer electronics, including PC and mobile phones, have experienced varying degrees of decline.

In the mobile phone industry, consumer demand is still relatively weak, and the shipment volume of the mobile phone market has been declining for several consecutive quarters. From the perspective of manufacturers, Huawei's ranking has dropped by 15 places this year, dropping out of the top 100 for the first time and ranking 111th on the list. Xiaomi Group's ranking has also dropped significantly from 266th place last year to 360th place.

Huawei's decline in ranking indicates that its performance growth has been hindered by the drag of its mobile phone business. On the list, Huawei's revenue reached $95489.9 million, with both revenue and profit declining, with a 70% drop in profit. However, Huawei's corporate business still maintains significant growth.

In the March financial report released this year, Huawei's rotating chairman Xu Zhijun said, "The severe external environment and non market factors continue to affect the company's operations. Amidst the storm, we continue to run, strive to ensure business continuity, and ensure support and service to customers. We also strive to produce more food so that we can survive and lay the foundation for future development."

In recent years, Xiaomi's market share in the domestic market has also decreased to some extent. According to IDC data, Xiaomi accounted for 15.5% of the total market share in 2021 and 13.7% in 2022.

Xiaomi's Q1 2023 financial report shows that it achieved a revenue of 59.48 billion yuan in the first quarter, a year-on-year decrease of 18.9%. Xiaomi pointed out in its financial report that the decline in revenue is mainly affected by the overall mobile phone market, and the overall market is sluggish. The profit growth was mainly due to the reduced promotion activities and brand promotion of Xiaomi's new products in the quarter. Against the backdrop of consumer pressure, major mobile phone manufacturers will increasingly pursue profit assurance as a whole.

The situation in the PC industry is similar, with major global PC manufacturers Lenovo, Dell, and HP experiencing varying degrees of decline in their rankings among the Fortune 500 this year. The decline in global PC shipments is mainly affected by negative factors such as global macroeconomic challenges, supply chains, weak consumer purchasing power, and severe channel inventory surplus.

And when it comes to the upstream of the industry chain, chip manufacturers such as AMD and Intel have mentioned that the sluggish consumer electronics market has led to weak demand in the chip market, and long-term development may slow down, making the market full of challenges. The industry expects that the PC industry is expected to achieve year-on-year growth as early as the second half of this year.

White power giants Midea and Haier have declined in rankings, while Gree has fallen behind

In the Fortune 500 list, the performance of China's top three white battery companies is differentiated, with Midea Group and Haier Smart Home ranking slightly lower, and Gree Electric Appliances falling behind.

Affected by various factors such as the epidemic, the domestic household air conditioning market in China has been experiencing negative growth for several consecutive years, and Gree Electric Appliances, which accounts for 70% of air conditioning revenue, has been affected by its performance. Gree Electric Appliances ranked 488th in the Fortune Global 500, down 52 places from 2020 in 2021, and 487th in 2022. Due to the fact that Gree Electric Appliances' operating revenue in 2022 was almost the same as the previous year, with a year-on-year increase of only 0.59% to 189 billion yuan, it fell out of the list this year. This year, Gree is expanding its business beyond air conditioning.

Midea Group benefited from the expansion of diversified businesses in the To B sector. Despite the decline in the home appliance market in 2022, its overall revenue remained basically unchanged compared to the previous year, only increasing by 0.78% to 343.9 billion yuan. Therefore, Midea's ranking fluctuated, rising from 288th in 2021 to 245th in 2022, and then falling back to 278th and 33rd this year.

However, Midea Group has promoted digital transformation and improved efficiency, connecting with the top ten Chinese companies in terms of net asset return on investment among the Fortune Global 500 in 2022 and 2023.

Haier Smart Home achieved significant growth in revenue and net profit last year, with a revenue growth of 7.22% to 243.5 billion yuan, thanks to its high-end and globalized business. It ranked 419th this year, down 14 places, with a relatively small decline. This year, Haier Smart Home continues to improve its global layout, including investing in the construction of Haier Egypt Ecological Park in Egypt.

From a global perspective, Samsung Electronics and LG Electronics from South Korea, as well as Sony and Panasonic from Japan, have all experienced a decline in their rankings in the 2023 Fortune Global 500 due to factors such as sluggish consumer electronics markets caused by inflation in Europe and America. They have fallen from 18th, 187th, 116th, and 193rd positions in 2022 to 25th, 204th, 140th, and 218th positions in 2023, respectively. But with more diverse businesses, they still rank ahead of China's leading household appliance companies overall.

A newly listed advanced manufacturing enterprise

Under the semiconductor cycle, Chinese and global semiconductor companies, as well as advanced manufacturing enterprises, have generally declined in their rankings on the Fortune Global 500. In terms of international semiconductor giants, Samsung Electronics' ranking has dropped from 18th place last year to 25th place; Intel's ranking has dropped from 145th place last year to 211th place.

In terms of advanced manufacturing companies in China, Hon Hai Precision has dropped from 20th place last year to 27th place this year, but it still ranks first in the semiconductor industry chain among the top 500 companies. Another semiconductor foundry giant, Heshuo, has dropped from 311 last year to 333 this year. TSMC Group has risen from 225 last year to 168th this year.

Among the aforementioned enterprises, Foxconn's parent company, Hon Hai Precision, is Apple's largest OEM enterprise. Benefiting from the continuous best-selling of new iPhone products, Hon Hai Precision has achieved an average high performance in the past two years. However, the unavoidable issue for this company is that its position in the Apple industry chain is constantly declining, and there is also significant uncertainty about whether its heavily invested new energy vehicles, chips, and other new tracks can gain a foothold in the market.

As a chip manufacturer, TSMC's special position in high-end customers such as Apple allows it to fully withstand the impact of economic downturn. Benefiting from the trend of 5G high-performance computing chip demand and data centers, as well as the increasing use of chips in small tools and vehicles, the company made a profit of NT $1016.53 billion last year, a year-on-year increase of 71.61%; The total revenue was NT $2263.89 billion, a year-on-year increase of 42.61%.

In the face of future market trends, TSMC President Wei Zhejia's wording in the second quarter financial report of this year was extremely conservative. He stated that the current semiconductor inventory adjustment is continuing as expected by the market, and the overall trend is weaker than previous expectations. Even though AI demand is strong, the trend of the overall environment cannot fully compensate for these interferences. When the inventory adjustment is made, everything depends on economic factors.

Equally noteworthy is that China's advanced manufacturing company, Lixun Precision, has made its debut on the Fortune Global 500 list, ranking 479th in its history. The reporter from First Financial News learned that Lixun Precision was established in 2004 and listed on the Shenzhen Stock Exchange in 2010. The company's main business focuses on industries such as consumer electronics, automobiles, communications, and healthcare, from parts and modules to system level products.

According to the publicly disclosed financial report of Lixun Precision, the company has spent over 20 billion yuan on research and development in the past three years, of which two-thirds have been used for process upgrades and iterations, and another one-third have been used for air drops. Industry insiders pointed out to First Financial reporters that China's manufacturing industry is experiencing risks and challenges such as shortages of basic raw materials, restrictions on imported equipment, and technological blockades. Only by valuing innovation can we take the initiative in the face of core technologies.

Chinese operators have performed relatively well

In the field of communication, the ranking of global operators has significantly declined, while Chinese operators have performed relatively well.

The largest telecommunications operator in the United States, AT&T, has experienced a major reshuffle in its position on the list this year, dropping from 32nd place in 2022 to 78th place this year. In addition, another operator giant in the United States, Verizon, has also dropped from 54th place last year to 64th place this year on the Fortune 500 list. Castel Telecom has dropped from 73rd place last year to 77th place this year.

Except for telecom operators in the United States, the rankings of telecom operators in other countries are also declining. Deutsche Telekom dropped from 62nd place last year to 79th place this year. The number of Japanese telegrams has dropped from 83 previously to 109 this year; The KDDI in Japan has decreased from 281 to 357.

In addition, operators such as Spanish telephone, Orange, licensed telecommunications companies, and Americas Telecom have all experienced varying degrees of decline in their rankings. British Telecom, which was still on the list a few years ago, has been falling off the list since last year.

On the domestic side, although the three major operators are also unable to escape the overall trend of declining operator rankings, China Mobile has slipped from 57th in 2022 to 62nd, temporarily ranking first among global operators. The rankings of China Telecom and China Unicom have declined by one place and remained unchanged from last year. Looking at the decline in global operator rankings, Chinese operators have maintained their rankings with relatively strong revenue strength.

It has been four years since the landing of the 5G commercial license, and China's 5G infrastructure investment has passed its peak, just like the United States. In January of this year, at the Citigroup investor conference, the three major telecommunications giants in the United States simultaneously stated that they would reduce their capital expenditures in the 5G sector in 2023. In addition to the long tail layout of 5G, global operators currently need to find new business growth points and effective tools to convert their business into profits.

From the financial report, emerging businesses are currently becoming the growth code for the profitability of China's three major operators. The continuous investment in new businesses such as cloud network integration and industrial digitization by operators will further promote the recovery of operator valuations and the enhancement of business profitability in the future.