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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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

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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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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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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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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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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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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

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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