Agencies
In China’s eastern coastal city of Ningbo lies a little-known manufacturer that makes one of the world’s thinnest amorphous-nanocrystalline alloys, more commonly known as magnetic "liquid metals”.
The stand-out of the product line are soft, nano-sized magnetic materials that measure no thicker than 14 nanometres. To put that into perspective, a human hair is around 80,000nm wide.
The material has a range of diverse applications, including ultra-fast wireless charging of smartphones, powering heavy-lift drones and photovoltaic electricity generation.
The producer of the liquid metals, B Plus New Material Technology, has had the backing of the central government for years, receiving preferential loans, tax breaks and other help, since advanced new materials belong to the frontier technology and manufacturing realms prioritised by Beijing.
China is pinning high hopes on a swelling crop of privately-run, small but smart "little giants” like B Plus amid an all-out drive to move up the value chain, revitalise its sagging private economy and spur technological breakthroughs to win a full-blown tech war with the United States.
Amid the oft-mentioned pledge to ramp up support, more so-called little giants are being identified, roped in and nurtured.Compared with "too big to fail” private enterprises, the little giant industrial champions enjoy a niche, and often, indispensable position in the global supply chain for certain specialised products.
"Private sector minnows now look like big fish since little giants assume outsized roles for the economy and tech breakthroughs. What Beijing wants now are these small but beautiful players,” said Zhu Tian, a professor of economics at Shanghai-based China Europe International Business School.
The focus on private sector little giants and industrial champions marks a shift from Beijing’s old playbook of marshalling the state sector and a few private leviathans to drive growth and a tech upgrade.
China’s ambitious "Made in China 2025” industrial policy unveiled about a decade ago to entrench its manufacturing lead and prowess is primarily undertaken by state-owned enterprises (SOEs).
The slew of programmes for tech indigenisation, ranging from home-grown commercial aircraft to advanced chips, semiconductors and artificial intelligence, also centre around state capital and a few leading tech conglomerates.
But it has not been until the recent years since the pandemic that micro-private enterprises, as well as tech and advanced manufacturing-focused small firms, have been thrust into the focus of support from authorities.
During an inspection tour in Ningbo in March 2020, President Xi Jinping spotlighted the new breed of vibrant small players that command a competitive edge in research and development (R&D), as well as market share, hailing their energy, perseverance and desire for innovation.
"By identifying and enlisting little giants and industrial champions, Beijing aims to give new impetus to the tech self-sufficiency drive while supporting the private economy,” said a Peking University scholar, who asked not to be identified as they are not authorised to speak to the media.
"Those standing to benefit are hi-tech ones, not the ones in obsolete, labour-intensive industries. Beijing sees its selection and preferential treatment as conducive to helping the private sector upgrade.”
The Ministry of Industry and Information Technology (MIIT) has, over the years, selected 12,000 little giants nationwide, whose business concentrates on new and critical materials, chip and semiconductor components, new energy and battery ingredients, pharmaceuticals and life sciences, among others.
To qualify, a company needs to achieve compound annual revenue growth of no less than 5 per cent.
Other thresholds include the number of patents awarded, domestic and overseas market shares, R&D expenditure as well as whether their products are advanced enough to replace imported equivalents.
As long as they can show strength and know-how in realms deemed as important, officially recognised little giants are assured of all-around support from central and local authorities covering funding, taxation and favourable talent acquisition policies.
In September, MIIT gazetted the sixth batch of more than 3,000 new little giants, mostly clustering in eastern economic powerhouse provinces like Zhejiang, Jiangsu and Guangdong, with Beijing, Shenzhen, Shanghai, Suzhou and Ningbo the five cities boasting the most of the new cohort.
Companies falling under the unicorn and gazelle classification are also expected to assume leading roles.
In May, China’s dwindling flock of new unicorns – start-ups valued at more than US$1 billion – caught Xi’s eye.
The president reportedly ordered a domestic capital boost, including "patient capital” – funds backed by state agencies and are oriented towards the longer term with greater risk tolerance – to quicken their rise.
Beijing is also looking to grow its gazelle stock – start-ups valued at more than US$100 million – with a Politburo meeting in July underscoring the need for more.
But while state nurturing is welcome, some little giants prefer to continue to stay small and remain under the radar to maintain their access to Western tech while avoiding being swept up by geopolitics.
"We don’t want to be another Huawei or ZTE targeted by Washington. We want to remain small and lesser known,” said a sales manager with a company in Suzhou that makes high-precision laser products.
Huawei Technologies and ZTE have become a lightning rod in recent years for bans, investigations and sanctions from the US and its allies following their meteoric rise to global prominence.