Fascinating story of little giants, unicorns, decacorns and hectocorns

When I first interviewed top executives of XGIMI, an intelligent projector manufacturer, in 2019, I was kind of surprised to learn the small startup topped China's projector market rankings by consultancy International Data Corp.

But Zhong Bo, CEO of XGIMI, said the company is not only eyeing the position of China's largest projector player but aims to become "the largest intelligent projector firm worldwide".

The Chengdu, Sichuan province-based company achieved spectacular growth in foreign markets in 2020, with its overseas revenue increasing more than 300 percent year-on-year. In March 2021, the startup was successfully listed on the Shanghai Stock Exchange.

XGIMI perhaps epitomizes China's "little giant" companies, or innovative small and medium-sized enterprises that specialize in niche sectors, command a high market share, boast strong innovation capacity and core technologies and, more importantly, are likely to become future champions in bottleneck sectors.

During this year's two sessions, the Government Work Report for the first time included goals of cultivating more "little giant" companies.

"For China, innovation capabilities and well-rounded supply chains have played an increasingly prominent role during its economic development. These 'little giant' companies, which are able to fill in certain weak niches in the country, will help improve the industry and supply chains and enable China to become a manufacturing powerhouse," said Li Chao, chief economist of Zheshang Securities.

To date, the country has 4,762 national-level "little giant" companies and over 40,000 provincial-level such firms. More than 300 "little giant" firms like XGIMI are already listed on various bourses.

A report from CITIC Securities found that listed "little giant" companies have outperformed other types of firms in terms of revenue growth and potential profitability. The former will likely become the future hidden champions like those in Germany and might even go on to make big contributions to the nation's manufacturing sector.

The CITIC Securities report also noted that the ROE, or return on equity, of listed "little giant" companies saw a steady increase since 2015 and had reached 10 percent on average.

Even during the COVID-19 pandemic last year, they maintained a positive growth rate and relatively high capital expenditure, which showed that such companies were less affected by the pandemic and were still growing rapidly.

In March, the Ministry of Industry and Information Technology said it will further support the incubation of an additional 3,000"little giant" companies this year.

By 2025, China aims to grow 10,000 "little giant" companies and 1,000 single-product champion enterprises. By that time, there will be 10,000 XGIMI-like companies contributing to innovations and the impetus to China's future economic growth.

Just a few days ago, I interviewed the founder of a two-year-old startup that focuses on the industrial internet. He sought anonymity but said he quit his job in Germany and decided to start up a business in his homeland China.

"Decades ago, most countries and regions couldn't keep pace with the incubation speed of small and innovative startups of Silicon Valley in the United States," he said.

"But now, many cities in China－not only Beijing, Shanghai and Shenzhen but also other cities like Suzhou in Jiangsu province－have nurtured an unprecedented number of innovative startups at an unexpected speed."

He said he believes China will be home to the world's largest number of "decacorns" and even "hectocorns" over the next few years.

While a unicorn is a startup with a valuation of $1 billion or more, a decacorn commands a valuation of more than $10 billion, and a hectocorn is valued at more than $100 billion.

According to a report by market consultancy CB Insights, the US was home to the most unicorns－488-globally last year, followed by China with 170.