Wuxi Changchen Technology Co., Ltd , https://www.wxchangchen.com
Chemical raw material companies are much smaller
In the traditional view, big companies are often seen as more powerful and stable than small businesses. However, the chemical raw material medicine industry in China has challenged this assumption. According to recent data, while large enterprises in this sector hold a significant share of total assets, their performance in key financial indicators such as industrial output value, sales volume, total profit, cost-profit ratio, and return on assets is actually lower than that of smaller firms. This shows that size alone does not guarantee superior economic performance.
There are 1,025 chemical raw material medicine companies in China, including 22 large-scale enterprises, 149 medium-sized ones, and 854 small-scale businesses. From January to August this year, the entire industry generated a total industrial output value of 98.483 billion yuan, up by 26.01%, and a sales value of 94.161 billion yuan, rising 25.14%. Notably, small enterprises contributed 36.01% of the total industrial output, while large companies accounted for only 29.09%. In terms of sales, small businesses completed 34.127 billion yuan, making up 36.24% of the industry’s total sales—surpassing the average growth rate by 7.4 percentage points. In contrast, large enterprises only managed 27.543 billion yuan, or 29.25% of total sales, with a growth rate of 20.48%, which was 4.66 percentage points below the industry average.
Profitability also highlights the strength of small enterprises. The industry achieved a total profit of 6.299 billion yuan from January to August, a 36.10% increase year-on-year. Small companies contributed 34.51% of this profit, compared to just 24.29% from large enterprises. Additionally, the cost-profit ratio of small businesses stood at 7.12%, significantly higher than the 5.68% of large companies. This indicates that small firms are more efficient and profitable despite their smaller scale.
From an asset perspective, small companies have been growing faster, with their assets increasing by 19.34% year-on-year, while large enterprises only saw a 1.46% rise. However, large enterprises still hold a larger share of total assets, at 37.07%, compared to 26.26% for small companies.
The ownership structure of the industry is also shifting. State-owned enterprises account for 23.36% of total assets, down slightly from the previous year. Joint-stock enterprises, on the other hand, increased their share to 45.36%, up by 8.76%. Private enterprises now hold 41.6% of the industry's total assets, while state-controlled enterprises hold 37.27%. This shift reflects the growing influence of private firms, which continue to expand at a faster pace than the industry average. Foreign-invested and Hong Kong, Macau, and Taiwan-controlled enterprises are also growing rapidly, further intensifying competition for state-owned companies.
The return on total assets (ROTA) for the entire industry is 5.04%. Among the different types of enterprises, state-controlled firms have the lowest ROTA at 3.51%, while private and Hong Kong, Macau, and Taiwan-controlled enterprises perform much better, at 7.46% and 6.39%, respectively. Large enterprises have a ROTA of 3.68%, while small enterprises achieve 6.06%. These figures clearly show that small businesses are outperforming larger ones in profitability.
All these data suggest that for large chemical raw material enterprises in China to achieve sustainable development, they must learn from the success of small companies. They need to accelerate reforms, invest in technological innovation, and improve internal management to boost their competitiveness and profitability. The future of the industry belongs to those who can adapt and evolve quickly.