Abstract: Diversification has been a myth for China Inc. Chinese companies, state owned or privately held, are sprawling over time. Using data on China’s listed companies, this chapter demonstrates that there is a negative correlation between ROIC and the extent of diversification. Diversification in general leads to large companies but not great companies. The case examples of Kunlun Energy and China Resources Enterprises, two central government-controlled companies listed in Hong Kong, illustrate how staying focused helps improve firm value. The aggressive pursuit of an expanding business portfolio, to a certain extent, should be held accountable for the lack of great companies in China.
Publication Year: 2016
Publication Date: 2016-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
Access and Citation
Cited By Count: 1
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot