Chinese Specialized “Little Giant” Companies Support High-quality New Economic Development

Amid the current wave of economic development, a group of distinctive companies – specialized “Little Giant” companies stand out with their unique business models and innovative spirits in China. These companies are not only leaders in their respective industry, but also the drivers of quality economic development. Little Giant company gather outstanding talents across industries and are committed to achieving higher quality and higher-level development through innovation, commitment and specialization. They pursue excellence and are not afraid to break traditional limitations, injecting new impetus into the upgrading and transformation of the economy.

What is a specialized “Little Giant” company?

The name consists of two parts. The first is specialization. The so-called specialized SMEs must be those who feature specialized, sophisticated, unique and innovative capabilities. The second is the “little giant”, which imply it must be the best-in-class among peer SMEs. There are quite a few “understated winners” in certain segmented areas¹.

“Little Giant” companies focus on their respective market segment, boast strong innovative capabilities and admirable growth potentials. Although small and less well-known, they generally possess unique expertise in strategic areas such as semiconductors, advanced manufacturing, medicine, energy and key minerals. Those who can provide key parts, components and supporting products for large-sized companies and large projects are outstanding examples of specialized SMEs.

“Little giant” companies achieved rapid development in recent years

“Specialization, sophistication, uniqueness and innovation” is not a new concept. It was first proposed by Zhu Hongren, the former chief engineer of the Ministry of Industry and Information Technology of China, at the press conference on “China Industrial Development and Industrial Policy Report (2011)” in July 2011 and he also mentioned that China would vigorously promote the development of “specialized, sophisticate, unique and innovative” SMEs during the Twelfth Five-Year Plan period. In 2018, the Ministry of Industry and Information Technology released the “Notice on Carrying out the Cultivation of Specialized ‘Little Giant’ Companies”, which clarified the specific thresholds for “Little Giant” company certification for the first time and began to cultivate a group of specialized “Little Giant” companies. From 2019 to July 2023, China’s Ministry of Industry and Information Technology has successively announced five batches of “Little Giant” companies.

By the number of cultivated companies, data from China’s Ministry of Industry and Information Technology shows that specialized “Little Giant” companies are in the core areas of their respective industry and occupy the key links in their respective industrial chain. They have outstanding innovation capabilities, possess core technologies, enjoy high market share in their own market segments, and feature good quality and performance. They are the core force among high-quality SMEs. China’s target was to cultivate about 10,000 specialized “Little Giant” companies². As of July 27, 2023, China has cultivated more than 12,000 “Little Giant” companies, 98,000 specialized SMEs, and more than 200,000 innovative SMEs³.

By industry distribution, over 10,000 out of the 12,000 “Little Giant” companies engage in the manufacturing business. Over 40% of the “Little Giant” companies are in the fields of new materials, new generation information technology, new energy and intelligent connected vehicles; over 60% are committed to fields related to basic industrial⁴.

By innovative capabilities, specialized “Little Giant” companies have over 200,000 invention patents, with an average of about 17 invention patents per company. In addition, specialized “Little Giant” companies were the main contributors in the forming of industrial standards, with a total of nearly 40,000 standards formulated and revised, an average of over 3 standards per company⁵. As of June 30, 2023, the average number of invention patents for listed “Little Giant” companies is 36.7, offering strong support for their continuous development and growth⁶.

By listing progress, the Ministry of Industry and Information Technology of China and the China Securities Regulatory Commission have promoted the establishment of a special board in nine regional equity markets for specialized SMEs to accelerate listings. As of June 30, 2023, more than 1,600 specialized SMEs have been listed on A-share market, accounting for over 30% of all A-share listed companies. Among them, there are more than 800 listed “Little Giant” companies, accounting for more than 15% of A-share listed companies⁷.

“Little Giant” companies to help high-quality new economic development

The majority of Chinese companies are SMEs. They are an important support for China’s economic and employment resilience and are also a key entity in building independent and controllable industrial and supply chains. In recent years, China has cultivated many specialized SMEs in the pursue of upgrading of the industrial base, industrial chain modernization, enhancement of competitive advantages in multiple strategic fields including manufacturing, healthcare, energy, minerals, and new generation information technology, and ultimately offering strong support for China to shape a new development pattern. The pacesetters among a slew of specialized SMEs, the “Little Giant” companies, have made contributions that cannot be underestimated in promoting new high-quality economic development.

Although it has the most comprehensive industrial categories in the world, but China also suffers a painful issue that its strengths in key links of the industrial chain is not strong enough, including insufficient basic equipment and weakness in key technical capabilities, and a lack of a “trump card” to win the competition in the international market. In addition, technological gaps and the problem of lack of players persist in certain niche but critical areas. In this regard, specialized SMEs and “Little Giant” companies can serve the purpose.

On the one hand, “Little Giant” companies focus on industrial business, and their leading products usually boast strong market competitiveness and have a high market share in industry segments domestically. The growth of specialized “Little Giant” companies can strengthen industrial chains and increase the added value of the industries. Based on the “Little Giant” companies certified by the Ministry of Industry and Information Technology, they have become the “new force” for the overall improvement of China’s manufacturing industry and key breakthroughs, providing an undisputed strong support to the frontline “troops” and playing a vital role in promoting the high-quality development of manufacturing industry. On the other hand, “Little Giant” companies have deeply committed niche fields for years, and made significant investment in innovation. They have connected the dots in solving the technological problems in industrial chain, and improved China’s technological independence, and eventually will solve the problem tech-related containments imposed by foreign countries⁸.

In recent years, “Little Giant” companies have stood up and are not afraid of making innovations. They have overcome various impacts, achieved gratifying results, and rapid and sound development. They have made great contributions to the Chinese economy and the strategic plan of “Made in China 2025”.