Accenture: High-Performance Chinese Companies Set to 'Jump Over the Dragon Gate'

According to Accenture's 2008 High Performance Business China Research report, China's high-performance businesses are well positioned to ride out the economic downturn, even as their low-cost advantages disappear. The report assessed the financial data of more than 200 public companies in China across 13 industries, and identified 36 high-performance businesses. This marks the second time Accenture has utilized its proprietary High Performance Business methodology to evaluate Chinese companies.

The report's title, "High Performance Business in China: Jumping over the Dragon Gate," is a reference to a Chinese legend, and meant as an analogy for Chinese businesses in the current financial climate, explains Accenture in Greater China CEO Gong Li. "The Chinese legend of 'Jumping over the Dragon Gate' describes the fortitude of carps that swim against strong currents and jump over a gate to transform into divine dragons. Chinese businesses now are facing a similar test of their endurance and ability to overcome hurdles on their path to becoming high performance businesses. After 30 years of tremendous growth, Chinese companies can no longer rely on the combination of low costs and soaring overseas demand."

The research shows increasing similarities between China's high-performance companies and their global counterparts, while also highlighting a growing divergence between poor and high performers in China. High performance companies have increased their profitability by 140 basic points on average in 2006 compared to 2005, while China's low performers saw a decrease in their profitability by 140 basis points during the same time period. Accenture points out that as the macroeconomic environment has toughened in 2008, the divergence between high performance Chinese companies and their industry peers is expected to grow. To face the new economic challenges, poorly performing Chinese companies need to adopt proactive changes to move higher up the value chain. According to Gong Li, "Our research confirmed that China's top business leaders are assertive, ambitious, and realistic. They are confident of their companies' outlook, well prepared, and have the right mindset to 'jump over the Dragon Gate.'"