Who has the most unicorns – China or the U.S.?
September 11, 2017 Category China News Round-up, Weekly
More than one third of the world’s unicorns were set up in China, as the country aggressively embraces technology to spur growth. A report by Deloitte and China Venture recorded that China has 98 unicorns – companies that venture capitalists and private investors valued at USD1 billion or more but have held back from listing – in 2017, accounting for 38.9% of the world’s 252 unicorns that are collectively valued at USD879.5 billion. The U.S. topped the list with 106 unicorns, or 42.1% of the total number, while third-placed India has 10.
Unicorn big names have not only come from the U.S. – sharing service providers Uber and Airbnb – but also from China such as Didi Chuxing, a Uber rival that bought Uber’s China business in 2016, and Alibaba’s finance arm Ant Financial, phone maker Xiaomi and drone producer DJI. In China, the finance sector has produced the biggest number of unicorns – 16, led by Ant Financial and JD Finance, a subsidiary of e-commerce JD.com. “Fintech will massively generate revenues and remain at a high growth pace in China,” said Zhong Yuntai, Senior Manager at Deloitte China, and the main author of the report.
In 2016, China’s fintech revenue reached USD421.4 billion, and is expected to surge to USD1.97 trillion in 2020, according to iResearch. Besides the fintech sector, China’s most valuable companies have also emerged in the e-commerce sector, which is driven by the rapidly expanding number of online shoppers, as well as in culture and entertainment, and auto industries. In the U.S. unicorn scene, almost one third of the 106 unicorns are corporation service providers, led by data analytics company Palantir Technologies and Infor, a provider of enterprise software and services. “But in China, the demand for corporation service, especially those offered by domestic companies, is weak,” said Zhong.
The report found U.S. venture capital firm Sequoia to be globally the most farseeing investor. It has invested in 40 of the 252 unicorns. In second place is China’s Tencent Holdings which has invested in 30 unicorns, and followed by Google, with 25. China’s e-commerce platform Alibaba has invested in 14, and search engine Baidu in 12. “Compared with U.S. companies, Chinese venture capitalists have become more aggressive, and they are more willing to bear high risks to seek high returns,” Zhong said.
Looking forward, the report projected that the unicorns would most likely come from artificial intelligence and the transport sector, on the back of the development of new energy vehicles and bike-sharing services, the South China Morning Post reports.
U.S. research firm CB Insights on the other hand, said that so far in 2017, 41 global technology companies have reached unicorn status. Most are in the U.S., but China has seen 15 new unicorns form this year while Europe has only five. Chinese tech giants Baidu, Alibaba, Tencent and JD.com, have invested in 46% of all China’s unicorns, according to CB Insights.
“According to the latest report of the World Intellectual Property Organization, China ranks 22nd globally in terms of innovation in 2017, up three places year-on-year, and becomes the only middle-income country that has narrowed the gap with developed countries,” said Shen Zhulin, Deputy Director General of the Department of High Technology Industry under the National Development and Reform Commission (NDRC). He made the comments at the news conference for the 2017 National Mass Entrepreneurship and Innovation Week, which will be held from September 15 to 21. Shanghai will be the main venue this year.
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