The question of corporate survival has become top of mind as companies grapple with how to move forward in an increasingly challenging business environment. Credit Suisse has shown that the average age of a company listed on the S&P 500 fell from almost 60 years in the 1950s to less than 20 years today.
By another measure, American economist Mark J. Perry found that only 53 companies from the 1955 edition of the Fortune 500 were still on the list in 2018. Across the pond, the FTSE 100 has also experienced significant changes as Schroders revealed that only 28 of the companies from the 1984 edition remained on the index in 2017. According to AJ Bell, only 30 of the original companies still exist in 2019, the 35th anniversary of the FTSE 100.
In Asia, the picture is different. Japanese companies have recorded some of the longest corporate life-spans, and Japan is home to several of the world’s oldest businesses, including the family-run Kongo Gumi, a construction company established in 578 AD to build the Shitennō-ji Temple. According to Nikkei Asian Review, turnover for the Tokyo Stock Exchange stands at approximately 89 years, in contrast with 15 years for the New York Stock Exchange and nine years for the London Stock Exchange. Turnover represents the average number of years that a company is listed on the Tokyo, New York and London Stock Exchanges.
While there is a tradition of endurance among prominent Chinese family businesses, including Tong Ren Tang, the 350 year-old Chinese medicine purveyor established during the Qing dynasty, Chinese media have reported that the average lifespan of SMEs in China today is 3.7 years. According to JPMorgan Chase, roughly a third of new US businesses exit within their first two years, and half exit within their first five years.
Wenchi Wei is an Account Director based in Shanghai.