National champions facts for kids

National champions are big companies that a country's government supports in a special way. Even though they are private businesses, the government gives them a strong position in the country's economy. These large companies are expected to do more than just make a profit. They are also meant to "advance the interests of the nation." The government creates rules and policies that help these specific companies succeed.

Many governments use this approach, especially in important areas like national defense. However, giving these companies an unfair advantage against other businesses can make it harder for new companies to start. This policy promotes a kind of "economic nationalism," where a country focuses on its own businesses first. It's different from a "free market" system, where the government tries not to get too involved in business.

What Are National Champions?

Under a national champion policy, governments expect one or a few domestic companies to not only make money but also to help their country. These companies are often in key areas like defense or making banknotes. Governments might allow these companies to become very large, sometimes by merging with other businesses. They might also limit competition from other companies, both from inside and outside the country.

Over time, this policy can lead to "economic nationalism." This means the country focuses on supporting its own industries, which goes against the idea of a completely free market. This approach creates an uneven playing field, making it hard for smaller or newer companies to compete fairly.

European National Champions

After World War II, France had a strong policy called dirigisme, which is a good example of national champions. France's leader, Charles de Gaulle, strongly supported this idea.

The United Kingdom also created its own national champions. For example, the British Steel Corporation was formed in 1960s by combining 14 large steel companies. Another example was Imperial Chemical Industries (ICI), created in 1926 with government support. The goal was to create huge companies that could make big investments and produce things on a very large scale. Other British examples included the General Electric Company (GEC) and British Leyland.

However, the British government stopped this policy in the late 1970s. They decided to let the market be more free and encourage foreign investment. By 2005, most of Britain's "national champions" were owned by foreign companies. Only a few, like those in aerospace (BAE Systems and Rolls-Royce Holdings) and medicine (GlaxoSmithKline and AstraZeneca), remained British-owned.

Sometimes, these policies don't work out. For example, in the 1970s, companies like ICL (UK), Bull (France), and Olivetti (Italy) tried to compete with IBM in computers but struggled. However, there have been successes too, like the European aircraft maker Airbus and the Chinese train company CRRC.

Chinese National Champions

China has also strongly promoted national champions. Between 1991 and 1997, China's government chose 120 state-owned companies to be national champions. These companies received a lot of protection and financial help from the government. They also got political advice and support when operating in other countries. The Chinese government even helps foreign investors partner with these national champions.

Besides CRRC, other well-known Chinese national champions include Huawei, Bank of China, and Sinopec. China continues to prioritize these companies "going out" into the world, especially with its Belt and Road Initiative.

Under Chinese leader Xi Jinping, China has encouraged its state-owned companies to merge. The goal is to create even larger and more competitive national champions that can gain a bigger share of the global market. This also helps reduce price competition among Chinese companies when they operate abroad.

Since 2017, China has especially focused on creating national champions in the technology sector. The State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) oversees state-owned national champions in important non-financial areas like energy, airlines, infrastructure, and strategic minerals.

Russian National Champions

The idea of national champions is still very much alive in the 21st century. Russia, for example, is a big supporter of this policy among the world's largest economies. Other examples include the merger of E.ON with Ruhrgas in Germany in 2000, and GDF with Suez in France in 2008, both backed by their governments.

Russian President Vladimir Putin has made "national champions" a key part of his government's strategy. He first wrote about this idea in his 1997 university paper. Putin later explained more about it in an article in 1999.

Supporting National Interests

Putin suggested that instead of just making money, Russia's large companies should also help advance the country's national interests. He proposed that Russia should take back some of the companies that were sold off in the past. Then, these companies could be combined into larger groups to better compete with big international corporations.

Putin believes that even if private companies own natural resources, the government has the right to control how they are used. He said the government should act in the best interest of everyone in society.

For example, energy companies like Gazprom are expected to keep prices low inside Russia to help the public. They only try to make the most profit when selling energy to other countries.

See also

• Corporatism
• Flag carrier
• National oil company
• State capitalism
• Nationalization
• Economic nationalism