China is the second-largest source of «unicorns» in the world. Most China unicorns come from the auto, fintech, internet, healthcare, and tech hardware sectors. What's next?
Hong Kong and China exchanges are getting ready for the next big wave, according to a new study presented at the 22nd Credit Suisse Asian Investment Conference on Tuesday in Hong Kong.
Following the U.S., China is the second-largest source of «unicorns» (commonly defined as start-up companies with valuations of more than a $1 billion). The general trends and prospects of Chinese unicorns in different sectors are:
- Still in a Catch-Up Phase
Trend and characteristics. Compared with the U.S., China’s scientific research, especially basic research, is still in a catch-up phase, so in the artificial intelligence (AI), hardware and biotech area, the spending hasn’t yielded many unicorns yet.
On the other hand, China’s consumer market is large, fast-growing, yet under-developed, providing rich soil for unicorns riding business model innovation. In the next few years, the internet may continue to dominate, but AI/Big data and biotech should start to catch up.
- Listing Regime Overhaul
In China, the Sci-Tech Innovation Board is soon to be launched in Shanghai. It will be an encouraging test field with completely new designs. It welcomes pre-profit innovative companies, red chips, and weighted-voting-right (WVR) companies.
In Hong Kong, three changes adopted in 2018 were well received by companies and investors, including embracing pre-revenue early-stage biotech companies, WVR companies and a concessionary route to secondary listing.
- Major Sectors
Credit Suisse's analysts focus on five major sectors: Auto, Fintech, Internet, Healthcare and Technology Hardware.
- Selected Unicorns
A two-page company profile features 60 companies which have reached the status of a «unicorn» in China.
