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Ranking of China's Business Leaders Exposes Common Myths


Wed Aug 22 2012


Harvard Business Review China has released a new ranking of Chinese business leaders, which it claims is the first ever such ranking to rely on objective long-term stock market performance. According to a blog post on the HBR Blog Network, the ranking  “bridges the Chinese and Western worlds by measuring leader and company performance in a way that makes sense for investors and management thinkers across the globe — long-term financial performance.”  

According to the authors, the measure is objective, using stock market data as opposed to reputation. It's also systematic and long-term, by tracking shareholder performance during the entire tenure of the leader. HBR China used it to assess 509 leaders of the 244 largest state-controlled and non-state-controlled (private) companies on the Chinese stock exchanges.  


Measured this way, the ranking uncovered several patterns that run counter to popular myths about Chinese companies and the leaders who run them. 

  • Myth #1: Manufacturing is the key to Chinese competitiveness**.** A quick look at the top rankers reveals that success for many came from actively pursuing an international strategy — 19 of the leaders in the top 50 ranking have done so.

  • Myth #2: Private firms have a performance advantage over state-controlled firms, or vice versa. A surprising finding for us was that ownership control does not explain performance. Although the top 50 list has more leaders from state-controlled than private firms, state ownership has no statistical impact on the leader's place in the ranking.

  • Myth #3: Leaders of large firms do better.  Size does matter, but small is beautiful in China. Leaders who took over a smaller firm (measured by the market capitalization when they started out) performed better than those that had a larger market cap, taking into account whether company is private or public.

  • Myth #4: Chinese top leaders stay in power a long time. Given their cultural and political history, one might imagine that Chinese leaders typically stay in power a long time. But, compared with the global average tenure of 8.8 years (among the top 50 global leaders), the average tenure of the top 50 leaders in China is shorter (6.8 years).  

For more information, read the HBR Blog Network post, “Top 50 Ranking of China's Business Leaders Exposes Common Myths.”

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