This year's list of the best small- and midsize companies throughout the Asia Pacific region is chock-full of survival stories and lessons for entrepreneurs. Unprecedented dislocations in the global economy disrupted supply chains over the past 12 months, froze lines of credit, depleted consumer coffers and sent business spending into hibernation. The 64 companies returning from last year are a testament to fearless management; 136 new entrants have seized opportunities arising from the economic uncertainty.
The combined China-Hong Kong set of companies numbers 78, the biggest yet and up 15 from last year. Relative economic strength on the mainland played a part, as does an increasing presence thereabouts of retailing, apparel, Web advertising and health care. Together, consumer-focused industries accounted for 102 companies on the list this year, versus 78 in 2008 and 67 on our first edition in 2005.
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How tough of a year was it overall? Roughly 600 companies passed our criteria for profitability, growth, modest indebtedness and future prospects this year, down from over 1,000 in years past. (For a more precise methodology, go online to forbes.com/BUB.)
Challenges remain. Though developed economies have begun to emerge from recession, consumers, particularly in the U.S., remain weakened by rising unemployment. It's seen in the dwindling count of consumer-electronics parts suppliers from Taiwan, which registered only 16 companies this year versus 25 in 2008, and 41 two years ago. Consumption will fare better in Asia, and not just in China as the rest of the region rebounds.
Through Aug. 31 last year's selections had outperformed their benchmark FTSE Small Cap Asia Pacific stock index by 26.4% to 17.3% (see chart). That's including one that got away: Shares of machine- tool maker Produce Co. went to zero when the company was delisted following a raid on its headquarters by Japanese Securities & Exchange officials, looking into financial misstatements, just after we wrapped up. We hadn't been alone in singing Produce's praises: The Jasdaq stock exchange had previously commended the company for its exceptional transparency.
The entrepreneurs behind our winners saw their personal fortunes trimmed despite providing a steady hand amid stormy seas. Sixty-five individual shareholders this year owned stakes worth $100 million or more at press time, down from 102 only two years ago. The 20-biggest stakeholders' average fortunes are down 26%, on average, but still amount to $661 million.