How can Cambridge benefit from the growth in Chinese unicorns?
The Chinese domestic unicorn business has grown rapidly over the past few years and is growing its international focus, writes John Dow, Business Development Manager with PwC in Cambridge.This will bring significant opportunities to the UK, and with similarities in market strengths, Cambridge is effectively positioned to benefit from Chinese unicorn investment.
Unicorns are local startups generating significant wealth early on in their company development. They are generally valued at more than US$1bn. There are more than 200 unicorn companies in China according to the Greater China Unicorn Index. In the first four months of 2019, 21 businesses were newly ranked as unicorns. Only the US has as many unicorns as China.
The majority of current Chinese unicorns are companies that have already achieved global status with brands recognised by the public. But hot on their heels is the next wave of unicorns.
They are not yet known on an international stage due to their previous focus on domestic operations in China, but are on the brink of growing into a global industry giant.
Many Chinese unicorns focus in the technology space, although some concentrate on other industrial sectors such as entertainment and media and transportation.
Future successes are expected in biopharmaceuticals and electric vehicles, which would lend themselves well to the Cambridge market given the leading expertise of the business and research base here in those fields.
The recent explosion of success for these companies in the Chinese domestic market has been heavily influenced by a growing population of prosperous consumers. According to the Chinese national bureau of statistics:-
- In 2018 consumer expenditure accounted for 80 per cent of China’s economic growth, up from 58 per cent in 2017
- In 2018 Chinese online retail sales reached US$1.33tn, up 24 per cent since 2017
- 800 million people use the mobile internet (handheld phones or devices to connect)
These strong figures indicate the vast opportunities for growth open to these businesses within the Chinese domestic market. Yet 70 per cent of unicorn business leaders already have plans or strategies for overseas expansion, and this is supported by the Chinese government.
They have implemented several initiatives to encourage overseas investment: For example the ‘China’s Belt and Road’ initiative, which places emphasis on ‘innovation-based open cooperation,’ and the ‘Made in China 2025’ initiative, which strives to make China a global leader in advanced manufacturing. Cambridge stands to benefit significantly from these international aspirations. With many unicorns focusing on the technology space there are many synergies between their business interests and the Cambridge market.
Chinese businesses are looking at areas such as artificial intelligence, cloud computing, data and analytics, the Internet of Things and 5G, – all a prominent focus for the Cambridge market.
Cambridge is already an established and attractive destination for Chinese businesses with frequent inwards visits, financial investments, corporate venturing, partnerships and direct investments. It has many of the attributes that a Chinese unicorn looking to invest will likely be searching for.
The rise and expansion of Chinese unicorns therefore holds great promise of opportunities for Cambridge and its resident business and research base.
• For more information about how your Cambridge based business could benefit from the Chinese unicorn market call John Dow on +44 7808 106790 or Email:john.d.dow [at] pwc.com ( john.d.dow [at] pwc.com)