IMD China Company Competitiveness Ranking

June 2023

IMD China Company Competitiveness Indicator Methodology

Prepared by IMD China Competitiveness Indicator research taskforce lead by IMD strategic advisor Wei Wei and IMD China Chief Executive Mark Greeven, June 24, 2023

At our team at IMD business school, we’ve been tracking how likely a firm is to successfully move toward a new knowledge discipline and competence in its effort to be competitive, innovative and to prepare for the future in the Chinese market. We introduced the China Company Competitiveness Indicator to measure how competitive companies are in the Chinese market sector by sector. Currently we cover the China Company Competitiveness Indicator for four industries: Food & Beverage, Healthcare, Automotive and Technology.

We have included the top key players by revenues and market cap in each industry. The ranking is based on nine main factors:

Business success
Business robustness
Investors’ expectations of future growth
R&D effort
Early Innovation result
Business diversity
Brand value
Public relation
ESG

These nine main factors, which carry the same weight in the overall result, comprise 36 variables. While on the variable level, the entropy weight method is used.

China Company Competitiveness Indicator for Food & Beverage Industry

Factor	Variable
Business success	Operating revenue annual growth rate
	EBITDA/revenue
	Operating revenue per employee
	Net profit annual growth rate
	Market share in the specific segments
Business robustness	Quick ratio
	Cash to total assets
	Total debt-to-equity
	Free cash flow/revenue
	Free cash flow annual growth rate
Investors’ expectations of future growth	P/S ratio
	P/E ratio
	Market cap annual growth rate
R&D effort	R&D intensity
	R&D expenses annual growth rate
	Number of patents
	Number of patents annual growth rate
Early innovation results	Press count on customer engagement （私域运营）
	Press count on digital （数字化）
	Press count on sustainability （可持续发展)
	Press count on innovation (创新）
	New products launch
Business diversity	Corporate venture capital investment number of deals
	Mergers and Acquisitions number of deals
	Percentage of international sales (Note: international sales for local companies, China sales for multinationals)
Brand value	Customer satisfaction ratings
	Major social media follower counts
	Major social media engagement rates
Public relation	Press count on high-level official visits
Public relation	Industry recognition or awards
ESG	Percentage of women in top mngmt team
	CEO age
	Carbon footprint and emissions reduction initiatives
	Charitable donations
	Philanthropic efforts
	Employee welfare efforts

All of our variables are hard data; that is, they are publicly available on company websites, annual reports, press releases, news stories, and special reports on topics such as corporate social responsibility. For press counts data, we used China’s major search engine Baidu, and counted the number of press releases on each trending topic previously identified in the industry. The data was also supplemented by thirdparty data sources from Pitchbook which specializes in the topic of corporate ventures, M&A and cross checked with its counterparty PE Data in China, Patent Search and Analysis portal by China National IP Administration, which specializes in patent search. We also used Statista, Wallmine, Stockus, Yahoo Finance, Google Finance, HKexnews and East Money.

To calculate the Indicator, first, we collected historical data for each company. Then we performed calculations for each variable before we standardized the criteria data. Next, we aggregated variables to the main factors and then determined the overall ranking. For the purpose of comparison, we ranked each company from 1 (best) to n (worst, n=sample size) on a scale of 1 to 100.