For Chinese readers, here is an interesting feature on the 16 unicorns established in the Greater Bay Area over the past few years. According to a Shenzhen-based research institute, SZEconomy, Shenzhen now has eight of these mythical animals – startups valued at more than US$1b – while Hong Kong and Guangzhou have three each and Dongguan and Zhuhai one each.
According to data released in 2019 by research company CBInsights, the total valuation of these companies has more than tripled in the past five years, from US$12 billion to US$46.76 billion, with Shenzhen firms accounting for US$25.75 billion.
The companies are either platform-driven or technology-driven. Platforms such as Xiaohongshu (Little Red Book), a lifestyle influencer, or ELE.ME, an online delivery firm, created new business models or applied technology in a way that fundamentally changed old industries. Technology-driven unicorns, meanwhile, are typically focused on AI, cloud computing, robotic technology or autonomous vehicles. Among the 11 unicorns in Shenzhen and Hong Kong, seven are driven by technological innovation, with drone maker DJI being perhaps the best-known brand.
Five of the 16 engage in hardware manufacturing and chip making, two are in medical and pharmaceuticals. The rest focus on fintech, robotic technology, healthcare, travel technology, apparel and autonomous vehicles.
Why Shenzhen and HK?
Besides being next door to each other, the two cities are the most internationally competitive. They offer the easiest access to global capital pools. Most of those companies that have been on the unicorn list for more than three years have obtained several rounds of investment from major global venture capital firms.
The author of the report suggests there is still much work to do if the Greater Bay Area wishes to become more globally competitive and produce more unicorns. The report says (our translation):
“A city that cannot spawn or absorb world-class unicorns is not a truly high-quality, open city. Foreign trade is only the initial stage of economic opening. We do not advocate that local governments use administrative resources to intervene in the market, to distort the market, to use only money or other means to artificially create unicorns. We are arguing that local governments must seek to truly participate in global market-oriented competition through genuine technological innovation, produced by a high-quality business environment. In this way can they attract capital and talent, and the creation of unicorns will follow. For many cities in the Greater Bay Area, this is a very urgent issue.”
Read more here (in Chinese)