Good morning, Peter Vanham here from Lake Geneva, filling in for Alan.
“Our problem is that life is too good here,” Philippe Leuba, the former Secretary of Economic Development of the Swiss canton of Vaud, told me a few years back, when he spoke at a dinner for visiting businesspeople. His point was that European companies stagnate because they don’t expand beyond their comfort zone.
He was vindicated this week when the new Fortune Global 500 list showed the number and strength of companies from Europe in decline. The U.S. and China, meanwhile, emerged as the twin engines of the Fortune Global 500. (You can find a great visualization of that new, bipolar reality here.)
In the past decade, Italy dropped from eight companies on the list to five, France from 31 to 24, and Britain from 26 to 15. Only Germany held steady, inching up from 29 to 30. The Swiss and Dutch, two non-G7 strongholds, dipped from 14 to 11 and 11 to 10, respectively. (Worth noting: The number of companies from Japan plummeted from 62 to 41.)
Why has the U.S. maintained its strength, while companies from most other G7 countries have slipped? Jean-Pascal Tricoire, chairman of Schneider Electric (No. 421), gave two reasons when he spoke to me yesterday from his native France.
First, he said, the new Fortune Global 500 is “the reality check…of a new world,” in which companies focused on technology and emerging economies have consolidated their global position. While the U.S. and China each saw the rise of Big Tech companies, no European or Japanese tech companies made a similar leap forward.
The second reason, he indicated, is that many European companies have been blocked from growing at home by domestic and European regulators. “Companies need a domestic market of a large scale to build a presence globally,” he said, “especially in a world where companies from India, China, and U.S. are already big.”
Schneider itself experienced the heavy hand of regulators two decades back, when it was barred by the European Commission from taking over its French rival Legrand. When Tricoire took over as CEO shortly after that, he said, he was only able to maintain Schneider’s ranking by expanding into foreign markets, growing by a factor of 10 in Asia, and turning the U.S. into Schneider’s largest market.
“The companies that make it to [the Fortune Global 500] ranking are companies that succeeded to globalize,” Tricoire, who has lived in Hong Kong for over a decade, said. “We are an example of that.”
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
TOP NEWS
Fighter jets
The F-35 fighter jet–long the focus of criticism and the butt of jokes about U.S. overspending–is now winning over pilots and foreign governments. The plane has been beset by manufacturing delays and cost-overruns and is expected to cost $1.7 trillion over its entire lifespan. Yet now manufacturer Lockheed Martin is benefiting from renewed attention—and spending—amid Russia's war in Ukraine. Fortune
The C-suite earns more
CEOs are not the only corporate officers getting paid more. In fact, compensation for some members of the C-suite, like the CFO and general counsel, is rising at even faster rates than the CEO. One reason: Less stigma around job-hopping, allowing even C-suite officers to negotiate for higher pay. Fortune
Crypto crash
The crypto crash is giving Katie Haun, founder of VC firm Haun Ventures and previous Fortune cover subject, the first serious setback of her career. Haun, who had stints at both the Justice Department and Andreessen Horowitz, launched her $1.5 billion crypto-focused fund mere months before the market crashed last year. Her fund is now investing more cautiously, even as fund partner Sam Rosenblum warns of “going too slow.” Fortune
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This edition was CEO Daily was curated by Nicholas Gordon.
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