At a glance: Six ministries and government agencies jointly issued guiding opinions aimed at accelerating the development of small and medium-sized enterprises (SMEs). Eligible SMEs are ideally active in technologies listed in the Industrial Four Bases Development Catalogue (工业“四基”发展目录), a supplement to the Made in China 2025 Strategy (中国制造2025). The policy aims to cultivate SMEs into “little giant” companies that excel in niche sectors. The key targets are as follows:
- By 2025, develop 10,000 “little giant”, 1,000 “single industry” and a large number of “leading” companies specialized in niche sectors
- Promote little giant companies to develop and apply autonomous and controllable industrial software
- Enhance the technological autonomy of industrial and supply chains through the promotion of little giant companies
- Build an ecosystem that integrates large and medium-sized companies and little giant companies to build advanced manufacturing clusters
MERICS comment: Chinese policymakers have for a long time sought to emulate Germany’s ‘hidden champions’: highly specialized, globally active companies with high market shares in niche sectors. The explicit mentions of technological autonomy and autonomous and controllable software demonstrate the important role of little giants in China’s push for technological self-reliance. The policy also serves to direct additional capital towards SMEs, as they struggle to attract funding from China’s state-run banks which prefer to lend to SOEs.
Policymakers are keen to see little giants thrive internationally. In 2019, they selected Siasun, a collaborative robot maker. In 2016, shortly after China liberalized its outward FDI regime, Siasun acquired German technical training institute Teutloff. Currently the firm is building an R&D center in Magdeburg. Little giants like Siasun play a key role in China’s attempts to boost automation to enhance productivity.
If successful, the rise of the little giants could impact European companies both negatively and positively. European players that enjoy significant market shares in China in related niche sectors could see reduced demand as customers are steered towards these new local suppliers. On the other hand, European firms seeking to onshore supply chains and integrate into the local technology ecosystem, to avoid disruptions caused by political frictions, could find little giants useful.
Policy name: Guiding Opinions on Accelerating the Cultivation and Development
of High-Quality Manufacturing Enterprises
Issuing bodies: MIIT, MOST, MOF, MOFCOM, SASAC, CSRC
Date: July 3, 2021