BEIJING, Aug. 8 (Xinhua) -- In the bustling entrepreneurship landscape, a distinct category of firms has risen to prominence, from Beijing's vibrant streets to Shanghai's cutting-edge tech hubs.

These enterprises, some named after wild animals and others after mythical beings, boast exciting development stories characterized by vast innovation potential. You may have heard of them before: eaglets, cheetahs, gazelles, little giants and unicorns -- all terms for pioneering companies.

Chinese leadership has outlined an ambitious strategy for bolstering the country's economic future, with a keen focus on nurturing the growth of emerging and future industries. A recent meeting mapping out priorities for China's economic development in the second half of this year vowed strong and effective support for gazelles and unicorns in particular.

This strategic emphasis underscores the pivotal role of innovative firms in driving technological advancement and economic growth. As China accelerates its push towards a more innovative economy, the nurturing of these dynamic enterprises -- characterized by their rapid growth and game-changing potential -- has become a centerpiece of national policy.

WANTED: GAZELLES

Gazelle companies, much like their namesake, the agile and swift antelope of the African savanna, are characterized by their rapid growth and exceptional innovation capabilities. These companies, while not yet giants, are on a fast track to scaling new heights, often possessing groundbreaking technology and unique business models.

They are regarded as potential unicorns -- private companies valued at over 1 billion U.S. dollars, typically less than a decade old, and possessing core technologies and competitive advantages.

The number of gazelle companies in a region is often a barometer of its innovative capacity and growth velocity. Unicorns, with their immense potential and innovative prowess, are vital indicators of an economy's and region's innovation environment and competitiveness.

Back in 2003, Beijing's Zhongguancun Science Park pioneered a gazelle plan that provided financial solutions for high-growth companies within the park. Starting in 2010, various local governments and high-tech zones across China followed suit, enacting policies to support the development of gazelle enterprises.

As innovation and entrepreneurship gained traction nationwide, these high-potential and resilient gazelle companies increasingly attracted attention from both government officials and industry leaders.

China's inland cities have been actively identifying and fostering gazelle enterprises. One notable example is Zhuzhou, located in central China's Hunan province, which has been implementing a gazelle cultivation plan in its high-tech zone since 2013.

Over the years, Zhuzhou has identified 110 gazelle enterprises and provided a cumulative 474 million yuan (about 66 million U.S. dollars) in interest-subsidized loans.

According to the city's dedicated support measures, companies in national strategic emerging industries, with high technological content and products or technologies that address gaps in the domestic market, can be classified as gazelle enterprises without passing performance criteria such as revenues.

Li-fun Technology was recognized as a gazelle enterprise and received interest-subsidized loans prior to 2019. In 2021, the energy storage equipment maker was included in a national list of enterprises that use specialized and sophisticated technologies to produce novel and unique products.

According to industry database Gazelle Cloud, the number of gazelle enterprises in China has surpassed 35,000 by the end of July this year. These companies span 92 major industry categories, with a significant concentration in Beijing, Guangdong, and Shandong.

Liu Chen, a research fellow at the Bank of China Research Institute, noted that government support for the development of gazelle enterprises can facilitate the formation of industrial clusters, and this, in turn, accelerates the optimal allocation of resources and regional economic growth.

VISION FOR UNICORNUCOPIA

China is home to a booming cohort of 369 unicorn companies, as per a report unveiled at the Zhongguancun Forum in April. This positions China at the forefront of the global unicorn landscape, with these privately held startups valued at over 1 billion U.S. dollars accounting for more than a quarter of the worldwide total.

These high-value firms are distributed across 47 cities, and a significant 60 percent cluster in China's key innovation hubs, including Beijing, Shanghai, Shenzhen, Guangzhou, and Hangzhou. Beijing takes the lead with an impressive 114 unicorns, the most of any city in the nation.

The narrative of China's unicorns is one of relentless innovation and expansion. Their founders have navigated the journey from "zero to one," launching ventures that redefine industry paradigms, and then scaling these novel ideas from "one to N," transforming them into influential forces on both national and global stages.

Unicorns, much like their mythical counterparts, require an optimal environment to prosper. They thrive in the "air" of a business climate that actively supports innovation. Their "water" is a constant infusion of capital, essential for their development. The "nourishment" comes from a pool of talented and creative individuals who drive these companies toward extraordinary success.

Here comes the catch. A deceleration in the birth of new unicorns in China has emerged in recent years. This trend, while not exclusive to China, is indicative of broader economic and geopolitical currents, including geopolitical tensions, rising interest rates, and cyclical industrial shifts. It signals an imperative for proactive measures to sustain the momentum of China's entrepreneurial ecosystem.

Luo Zhiheng, chief economist of Yuekai Securities, said there is a lack of sufficient financial support for unicorns and gazelle companies, partly due to inefficient mechanisms connecting venture capital with innovative start-up projects.

China is addressing the capital challenge head-on, ensuring a steady flow of funds to fuel the growth of these high-potential enterprises.

The third plenary session of the 20th Communist Party of China Central Committee adopted a broad reform blueprint that pledges to encourage and regulate the development of angel investment, venture capital, and private equity investment, better leverage the role of government investment funds, and work to promote the development of patient capital.

In June, the State Council released policies to boost high-quality development in venture capital. These measures aim to enhance the full life cycle of venture capital, from fundraising to exit strategies, providing crucial financial support to foster more gazelle and unicorn enterprises.

Recently, Shanghai launched three major pilot industry funds, totaling approximately 89 billion yuan, with a focus on key areas such as integrated circuits, bio-medicine, and artificial intelligence. Jiangsu Province and Guangzhou city have also been at the forefront of setting up industry funds in the first half of the year.

Zhong Zhengsheng, chief economist at Pingan Securities, noted that the leadership's emphasis on gazelles and unicorns indicates that forthcoming policies may increase support in terms of initial public offerings (IPOs) and financing, creating a demonstrative effect that bolsters venture capital.

This support could help China gain a strategic edge in increasingly intense international competition, Zhong said.

Source: Xinhua