TAIYUAN, Aug. 16 (Xinhua) — Since the launch of a new round of state-owned enterprise reform in 2017, Shanxi’s coal-related state-owned enterprises have seen their rankings fluctuate on Fortune’s Global 500 list, reflecting a shift in industrial thinking in this major energy province.

A few days ago, the 2020 Fortune Global 500 list was released, once again bringing together Shanxi’s five major state-owned coal enterprises: Tongmei, JiaoMei, Lu’an, Yangmei, and Jinmei. As a result, Shanxi ranks sixth nationwide in terms of the number of companies listed on the Fortune Global 500. Yet behind this impressive ranking lies a hidden concern: “Shanxi’s state-owned coal enterprises dominate the entire market,” and “the listed companies are large but not strong.”

For a long time, Shanxi has been plagued by the imbalance in its “one-coal-dominant” industrial structure and a severe lack of momentum for transformation. In response to these industrial challenges, Shanxi has adopted an industrial strategy focused on “optimizing the allocation of state-owned assets” and “accelerating specialized restructuring.”

This shift is vividly illustrated by the changing composition of the Fortune Global 500 list, as reflected in the rise of Shanxi-based enterprises. In 2012, Shanxi Coal Sales & Marketing Group made its debut on the Fortune Global 500 list at No. 447, marking a breakthrough for Shanxi Province. At that time, Shanxi was nearing the end of its “golden decade” in the coal industry.

Since then, after experiencing a coal industry downturn, the overall ranking of coal enterprises in Shanxi has shown a downward trend. This year, Yangmei and Jinmei have both fallen to the bottom two positions on the list. However, while revenue rankings have declined, corporate profits have emerged as an important indicator.

In recent years, Shanxi has optimized the allocation of state-owned assets to drive transformation, focusing on “slimming down and strengthening enterprises, improving quality and boosting efficiency,” and abandoning the practice of pursuing false “scale.”

Take Shanxi Coking Coal as an example: In 2018, due to the vigorous implementation of asset divestitures such as the “Three Supplies and One Service” initiative, its revenue improvement was not significant, causing Shanxi Coking Coal to drop out of the Top 500 list. Yet, in 2017, it had been the most profitable among Shanxi’s five major coal enterprises. In 2019, Shanxi Coking Coal ranked 465th with revenues of 26,692.8 million USD and profits of 141.6 million USD. In 2020, Shanxi Coking Coal ranked 485th with revenues of 26,178.9 million USD and profits of 211.6 million USD.

Behind the decline in revenue scale and the continued rise in profits, Shanxi Coking Coal Group stated that, against the backdrop of state-owned enterprise reform, various key indicators related to development quality—such as the full cost of raw coal, the full cost of coke, and the comprehensive financing cost—have been steadily optimized.

Not surprisingly, as companies from Shanxi province make the list of the Global 500, they are all focusing intently on profit metrics. Shanxi Jinmei Group stated that it has been listed for eight consecutive years. In 2019, the company’s profit reached 22 million U.S. dollars, ranking third among the five coal enterprises from Shanxi that made the list.

Against the backdrop of state-owned enterprise reform and industrial transformation, Shanxi Coking Coal Group and Shanmei Group have just merged and reorganized, and Lu'an Chemical Group has been officially established. Shanxi Gas Group and China National New Energy Group may once again initiate restructuring. Under a series of industrial reorganizations and optimizations, the long-standing dominance of Shanxi’s five major coal enterprises on the industry rankings could soon be broken.

In response, Zhang Bo, Executive Director of the Research Center for Green Development at Shanxi University, stated that the above-mentioned changes indicate that Shanxi’s state-owned enterprises are shifting from a quantity-based approach to a quality-based one, placing greater emphasis on cultivating their core competitive strengths. With specialized restructuring and optimized allocation of state-owned assets, Shanxi may soon see the emergence of non-coal companies ranked among the top 500 in China.