Merics Report

Nice topic how china success to fosters their Little Giant Companies

The MERICS Report titled “Accelerator State: How China fosters ‘Little Giant’ companies” provides an in-depth analysis of China’s evolving industrial policy, focusing on the promotion and support of high-tech small and medium-sized enterprises (SMEs). Here’s a summarized overview:

  • Emergence of High-Tech SMEs: These companies are crucial in China’s industrial policy, specializing in niche markets and developing domestic alternatives to foreign inputs.
  • Shift in Policy Focus: Previously, Chinese policy focused on larger firms, but now there’s a significant push towards smaller, innovative companies.
  • Tiered-Cultivation System: A multi-level support system is in place to identify and fast-track the growth of specialized high-tech SMEs.
  • “Specialized SMEs” and “Little Giants”: These are government-certified high-tech SMEs that receive extensive support but face competition and re-evaluation every three years.
  • Increased Financing: The government is directing significant financial resources towards high-tech companies, increasing access to loans and equity markets.
  • Comprehensive Support System: This includes subsidies, R&D support, collaboration with universities, and a favorable intellectual property system.
  • Risks and Rewards: While the system has successfully fostered companies like Leaderdrive and Endovastec, there are concerns about misallocation of resources and the efficacy of officials in identifying promising firms.
  • Challenge for Foreign Companies: Foreign firms face increasing competition from these state-backed SMEs, both within China and globally.

Detailed Insights

  • Government Strategy: The report details the Chinese government’s strategy to cultivate a robust domestic high-tech sector, including financial incentives, market access, and R&D support.
  • Impact on Foreign Business: The growing competence and global reach of these SMEs pose a significant challenge to foreign companies in similar sectors.
  • Challenges and Criticisms: The system’s dependence on government selection and support raises questions about its long-term sustainability and effectiveness.
  • Global Implications: The rise of these SMEs is likely to have significant implications for global markets, especially in high-tech industries.


China’s focus on fostering high-tech SMEs through a comprehensive state-backed system marks a significant shift in its industrial policy. While this approach has successfully cultivated a number of promising companies, it also presents challenges, both internally in terms of resource allocation and externally in terms of global market dynamics.

Discover more from Susiloharjo

Subscribe to get the latest posts sent to your email.

Discover more from Susiloharjo

Subscribe now to keep reading and get access to the full archive.

Continue reading