Which tech firms qualify as ‘little giants’? Beijing releases criteria for the ideal industrial enterprise
- To qualify, little giants must operate in strategically important industries such as semiconductors, software and artificial intelligence
- China is aiming to have over 1 million ‘high-quality SMEs’ by 2025, according to a separate notice published by MIIT
China has unveiled detailed criteria for determining which industrial enterprises qualify as “little giants”, as Beijing doubles down on its strategy to create an army of “small but powerful” firms to plug technology gaps.
Beijing already announced a target of cultivating 10,000 little giants by 2025, with officially recognised companies gaining access to preferential treatment such as subsidies, tax cuts and other grants. That move triggered a rush to identify small and medium-sized enterprises (SMEs) that could be contenders in products or processes that could help the country achieve its goal of tech self sufficiency.
According to the latest guidelines published by the Ministry of Industry and Information Technology (MIIT), the body in charge of the project, little giants need to have over three years of experience in a “crucial part of the supply chain” and hold at least 10 per cent market share in their niche.
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Little giants must operate in strategically important industries such as semiconductors, software and artificial intelligence, and need to be able to “fix weaknesses” in the domestic supply chain, according to the MIIT application form.
Companies with more than 50 million yuan in annual revenue must also invest at least 3 million yuan (US$450,000) into research and development to qualify.
The regulator plans to develop a database of all high-quality SMEs to track their performance and provide targeted services to each company, according to the regulator.
The newly published notice did not elaborate on the type of supportive measures that would be offered to successful firms. However, last year the central government provided more than 10 billion yuan in subsidies to more than 1,000 national little giant enterprises, Xu Xiaolan, MIIT vice-minister, said earlier this year.
China has already nurtured 4,762 little giants since launching the initiative, and there would be over 1 million “high-quality SMEs” by 2025, according to a separate notice published by MIIT.
“High-quality SMEs are not only an important driver of economic growth, but are crucial to help improve the stability and competitiveness of the industrial supply chain,” an opinion piece in the People’s Daily, the mouthpiece of the Chinese Communist Party, said last week.
Release of the detailed guidelines comes at a time when the Chinese government has been allocating more support to local SMEs in a bid to close technology gaps as geopolitical tensions with the West ratchet up.
Alexander Brown, an analyst with the Mercator Institute for China Studies, said in a research note published earlier this year that China’s little giant plan was “taking a leaf out of Germany’s economic handbook”, in that they hope to emulate Germany’s “hidden champions” and develop core technologies China is lacking.
“But whether the country can actually engineer such specialised firms remains uncertain,” Brown wrote.
