Tech startups: Rise of China’s silicon dragons

China's internet players are forcing multinationals to rethink fundamental assumptions about the sources of innovation-led growth, says a recent study by the PwC Experience Centre. 

Titled The rise of China’s silicon dragon, the report examined a collection of white papers on China’s burgeoning technology economy by the consultancy firm, as well as press articles on the subject. 

“Alibaba’s record-breaking opening-day IPO changed everything,” writes the author of the report, Tom Birtwhistle, a senior manager in PwC’s Experience Centre focusing on digital strategy. “International business leaders are beginning to realise China’s digital ecosystem and the major players at its forefront are quickly shaping the future of digital commerce and innovation — now a force to be taken seriously.”

According to the report, five of the world’s 14 privately-owned companies valued at more than US$10 billion are Chinese-headquartered. Furthermore, after the United States, China is home to the largest collection of ‘unicorns’ (companies valued at US$1 billion or higher based on fundraising). The author anticipates further growth. 

Over the past 24 months, VC investments in the market have skyrocketed. China’s deal volume exploded from 509 in 2013 to 1,726 in 2015. This growth is largely due to the success of internet and mobile-based services, says the paper. Top of the fundraising list is taxi-hailing app Didi Kuaidi, followed by group-buying firm Meituan and online travel agency Ctrip. Companies who recognise the opportunity represented by this growth will have a step-change advantage over their competitors, writes Birtwhistle.