A substantial number of multinational corporations operate in China, both Western and otherwise. China is one of the world's fastest-growing economies, and its inhabitants make up almost 20% of the world's population. Since its adoption of free-market principles, China has become one of the world's most hyped investment locations.
Increasing numbers of large multinationals have a presence in the country and, despite some uncertainty related to the ongoing U.S.-China trade war, the trend is likely to continue in the years ahead. That's because, as an emerging market economy, China presents a promising opportunity to many companies and investors.
Key Takeaways
- China is one of the world's largest economies and numerous multinational companies operate there.
- Restaurant brands like KFC, McDonald's, and Starbucks have been expanding rapidly in China.
- Some companies, such as AT&T and GE, have been in China for 20 or 30 years.
- Walmart, Target, and other large retailers now have a presence in China.
- Examples of large Chinese multinational companies include Lenovo, Huawei, and NIO.
Main Multinational Corporations Operating in China
Consider this: KFC now sells more chicken in China than in the United States. GM, along with its Chinese partners, sells close to 3 million vehicles in China each year. Cummins (CMI), the Indiana-based engine manufacturer, was selling roughly 40% of its products in China by 2019.
Indeed, American multinationals such as Yum! Brands (YUM), which owns Pizza Hut, KFC, and Taco Bell, have expanded rapidly in China. The number of Pizza Hut franchises more than doubled from 2009 to 2019. Meanwhile, as of 2020, McDonald's Corp. (MCD) operates more than 3,700 locations in China. Starbucks (SBUX) has been growing rapidly in the region and now has 5,000 stores in 200 cities in mainland China.
Western technology companies such as Apple (AAPL) have also seen enormous success in China. The country is now Apple's third-largest market (behind the U.S. and Europe) and accounts for 20% of its revenue. Intel (INTC), Dell Computer (DELL), and Texas Instruments (TXN) are among the other tech firms with footprints in China.
Retailers like Walmart (WMT), Trader Joe's, and Home Depot (HD) operate there. China is an important source of revenue for many multinational apparel companies like Nike (NKE), Gucci, and Abercrombie & Fitch as well. Other notable consumer goods companies with sales in China include Avon, Colgate-Palmolive, Tyson, Nabisco, Kellogg's, Danone, Conagra, and Tupperware. In the healthcare space, Johnson & Johnson (JNJ), Pfizer (PFE), and Eli Lilly & Co. (LLY) are active in the region.
A large number of non-Western multinationals also operate in China. For example, the Japanese car manufacturers Toyota, Mitsubishi, and Subaru and the giant Korean multinationals Samsung, Hyundai, LG (Lucky Goldstar), and Kia have interests in the country.
Lastly, many Chinese multinationals are also growing rapidly. Examples include DJI Innovations, Haier, Lenovo, Huawei, Datang Telecom, and electric car-maker NIO. Lenovo is a good example of a healthy and significant Chinese multinational. Its operating income is over a billion dollars. DJI, which makes the Phantom series of UAVs (unmanned aerial vehicles), has also seen rapid growth due to the exploding drone market.
