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Opinion
For China’s next big tech leap, its ‘little giants’ must grow up
State-supported innovation can only take these SMEs so far. The question is whether they can thrive in a global market on their own
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Jeffrey Wu is a director at MindWorks Capital, a leading Hong Kong-headquartered venture capital firm specialising in technology investment across Greater China and Southeast Asia.
China’s “little giants” are at the vanguard of its next technological leap. The number of these small and medium-sized enterprises, nurtured under the 14th five-year plan to lead in advanced tech sectors, has exceeded the government’s target. The government aims to accelerate their growth further with expanded capital access. But their leap from innovation to sustainable market success remains precarious.
China tops global research rankings and leads the world in patent filings. Despite these achievements, the challenge lies in converting innovation into commercial success on the global stage. This push aligns with China’s broader effort to reduce its dependence on foreign technology and bolster domestic manufacturing – cornerstones of its “Made in China 2025” strategy. But innovation alone rarely guarantees market success.
Frontier tech industries are notoriously capital-intensive, with long and uncertain payback periods. Research and development are only the beginning. Without a clear path to commercialisation, even the most groundbreaking advances risk being trapped in a loop of innovation without real-world impact. Many SMEs often become dependent on state subsidies, rather than evolve into market-driven enterprises.
China’s unicorns – start-ups valued at over US$1 billion – are an enticing but incomplete measure of success. In emerging tech sectors, valuations can often be more speculative, especially in sectors without established frameworks for revenue. Unicorn status may signal prestige, but without consistent market traction, these companies risk becoming high-profile mirages – valued more for potential than substance.
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