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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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A staff member works at the headquarters of TankeBlue Semiconductor in Beijing, on January 24. China is nurturing “little giants” like TankeBlue to lead in advanced tech sectors. Photo: Xinhua
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.
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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.
China’s rigid focus on specialisation within industrial clusters complicates matters further. While specialisation fosters deep expertise, it risks stifling cross-sector collaboration – particularly in an interconnected world in which breakthroughs often occur where fields intersect. Robotics and artificial intelligence (AI) converge in manufacturing, while materials science fuels innovation in aerospace and automotive industries.

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China is boldly going where no one has gone before

China is boldly going where no one has gone before
China’s narrow focus could undermine the very progress it seeks to promote. Chinese SMEs advance through a pyramid-like framework, progressing from provincial recognition to national “little giant” status. Top performers receive subsidies, policy support and integration into key supply chains – reflecting the state’s strategy of fast-tracking leadership by grooming SMEs for industrial dominance.
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