The term "unicorn" is widely recognized in the capital markets. It generally refers to privately held companies that are less than 10 years old and have a valuation exceeding USD 1 billion, with a few valued at over USD 10 billion. The term "little boss" was coined by ANBOUND’s founder Kung Chan. It primarily refers to medium-sized enterprises that have been in operation for a long time, usually over 10 years, with specialized products, and they are among the top three in their global industry rankings. Recently, during research conducted in the Jiangsu and Zhejiang regions of China, ANBOUND researchers encountered several such "little bosses”. One example is a tool industry company that ranks among the top three in its field worldwide. Due to its high-quality products and strong reputation, American clients are even willing to pay punitive tariffs themselves, rather than abandon purchasing these products. Such companies truly exemplify the "little boss" concept. They possess leadership and play a trailblazer role in their industry.
In China, there are certainly many such "little boss" companies, even if they are not being labeled as such officially. At times, they are labeled as “specialized little giants”. As of the end of July 2023, China has cultivated over 12,000 enterprises, more than 98,000 specialized, refined, and new small and medium-sized enterprises (SMEs), and 215,000 innovative SMEs. In terms of industry distribution, over 10,000 of the 12,000 "little giant" companies are in the manufacturing sector. More than 40% of them are concentrated in the fields of new materials, next-generation information technology, new energy, and smart connected vehicles, while nearly 60% are focused on industrial foundational sectors.
In any case, these data should be taken as a reference only, as there are inconsistencies in statistical criteria and standards.
In fact, the concept of "little boss" is closely related to the strategic direction for the development of China's manufacturing industry proposed by ANBOUND. In the late 1990s, Kung Chan introduced the important concept of "refined industrialization", and around 2011, he formally introduced the concept of "refined manufacturing". "Refined manufacturing" refers to the production activities and systems that involve continuous innovation in design and materials, and high-value industrial products produced under stringent quality control. Examples of this include Swiss watchmaking, German equipment and tool manufacturing, and Japanese electrical appliance manufacturing. It is important to emphasize that "refined manufacturing" is different from industrial design. Industrial design primarily addresses product design, whereas "refined manufacturing" emphasizes systematic and patterned production methods, including brand and industry reputation, as well as materials and high-quality manufacturing throughout the entire production process.
Under the new development concept, the idea of "precision manufacturing" has gradually become a consensus among all sectors of society, in contrast to the widespread skepticism over it several years ago. Since 2016, the concept of precision manufacturing, which closely aligns with the promotional idea of "craftsmanship", first appeared in that year's government work report. It has been heavily promoted and advertised, becoming a key move for the government to adapt to the situation.
On one hand, China has long participated in the process of economic globalization by leveraging its cheap production factors, such as low labor costs, which have resulted in inexpensive "Made in China" products. The pressure of economic transformation and industrial restructuring in China has led to pressure for adjustments in Chinese manufacturing. On the other hand, the so-called “shanzhai, i.e., imitation or counterfeit product model, which relied on low prices, captured the short-term market. As China's influence in the international market grows, there is increasing global scrutiny of China's intellectual property protection, and China's own demand for innovation is rising. This compels Chinese manufacturing to shift towards higher-end development.
Furthermore, under the backdrop of de-globalization, the concept of "close produce" proposed by ANBOUND is also gaining momentum. China can no longer act as a low-cost "world factory" as it did in the past; it must now evolve into a "world factory" of such high quality that it cannot be ignored to compete in the international market. All in all, through precision manufacturing, China aims to gain new market space, solidify its industrial position, and create a sustainable market model, which is the significant reason for developing "little boss" enterprises.
As for "unicorns", they are undoubtedly important, but their survival is a major issue. The concept of unicorn was first introduced in 2013 by the Chinese-American investor Aileen Lee, based on the trends in the technology startup market. At that time, the number of global unicorn companies was 91. However, since 2017, this number has exploded due to capital incentives, soaring to over 1,300 by 2022, far exceeding the total number of Nasdaq-listed companies with valuations over USD 1 billion at the turn of the century. Nevertheless, the situation has drastically changed in the past two years. In particular, the number of unicorns in 2023 was 85% lower than two years ago. According to PitchBook data, in the first ten months of 2023, the number of new unicorns was 88, significantly lower than the 346 in 2022 and much below the 622 in 2021. The total valuation of unicorns was USD 229.4 billion, the lowest on record, representing only about one-third of the 2022 value and less than 15% of the peak during the global bull market in 2021. Additionally, both the monthly valuations and the number of these companies have been consistently low.
The peak period for the growth of China's unicorns was from 2017 to 2022. For example, according to Hurun’s list, China produced 502 unicorns during this period, averaging over 83 per year. The peak was in 2021, with 120 new additions, but in 2023, only 44 new unicorns emerged, showing a dramatic decline. In fact, many well-known unicorns from the past decade have disappeared or are on the verge of disappearing. For instance, in the healthcare sector, the once USD 10 billion valued unicorn Ping An Healthcare and Technology was shut down in 2022, with its related businesses absorbed by other subsidiaries of Ping An Group. The peak-period leader in medical big data, Yidu Tech, which once had a market value exceeding HKD 50 billion, now has a valuation of less than one-tenth of that. Other companies like WeDoctor, previously valued at USD 5.5 billion, and Medlinker, formerly valued at USD 4 billion, have undergone significant layoffs and now operate quietly behind the scenes. The situation in the food and beverage industry is even less optimistic. Disappearing brands include once-popular names such as Tiger Attitude and Dim Sum Bureau of Momo.
According to Kung Chan, "unicorns" are intangible; they are in essence objects of dream-making in the capital market. Meanwhile, the economy requires grounded and practical to be effective and productive. While capital can rapidly create large-scale unicorns, enterprises that are considered "little bosses" when given an additional ten or twenty years of development, can achieve similarly significant scales. Therefore, compared to the potentially fleeting "unicorns", "little bosses" are actually the mainstay of China's economic development. Investing thousands of billions of policy resources into “unicorns” is less beneficial for upgrading Chinese industries and promoting economic growth than investing the same resources into "little bosses".
In southern China, there are many companies that are committed to deeply cultivating their industries, and striving for excellence. These companies, though often obscure and not active on social media platforms, possess profound expertise and technological accumulation, and they hold substantial global industry positions. These are the true industry leaders. When Chinese policy resources begin to focus on and support these companies, and when such support is effectively implemented, there will be hope for the Chinese economy. Therefore, it is crucial not to underestimate their current scale. While their enterprises may not be large individually, their numerous numbers create a formidable force, allowing them to dominate and lead within the corporate landscape.
Final analysis conclusion:
"Unicorns" are often intangible, and they are the dream created by the capital market. While capital can rapidly produce large-scale "unicorns", "little bosses", which exemplify precision manufacturing, can achieve a similar scale over ten or twenty years of development. Therefore, compared to the potentially ephemeral "unicorns", “little bosses" are the real backbone of China's economic development. Investing billions in policy resources into "unicorns" is less effective for upgrading Chinese industries and driving economic growth than pouring those resources into "little bosses".
