<article>China, the second largest source of unicorns after the US, is expected to see the consumer internet sector continue to dominate while hi-tech sectors like AI/big data and biotech play catch-up, according to a Credit Suisse report.</article>

China, the second largest source of unicorns after the US, is expected to see the consumer internet sector continue to dominate while hi-tech sectors like AI/big data and biotech play catch-up, according to a Credit Suisse report.
&#8220;Compared with the US, China’s scientific research, especially basic research, is still in a catch-up phase, so in the AI, hardware and biotech area, the spending hasn’t yielded many unicorns yet. On the other hand, China’s consumer market is large, fast-growing, yet under-developed, providing rich soil for unicorns riding business model innovation. In the next few years, internet may continue to dominate, but AI/Big data and biotech should start to catch up,&#8221; the report notes.
At present, the consumer theme oriented sectors such as auto, fintech, healthcare and technology hardware account for bulk of unicorn startups. The report, citing data from CB Insights, noted that as of February 20, 2019, the world has 326 unicorns with an estimated total valuation of $1.08 trillion. China has 93 unicorns (at 30%) with total valuation of around $327 billion, while the US has 156 unicorns (48% of the global total) with aggregate valuation of around $558 billion.
While China has a big advantage in artificial intelligence/big data due to its huge available data with its large population and a wide gene pool for biotech, the number of completed deals in these sectors lagged behind many countries, including the US.
The chart below shows that in the area of AI/Data/Robotics/Software, there were a total of 13 completed deals worth $1.75 billion. These figures lag behind the US which has seen 62 deals worth an aggregate total of $2.28 billion completed, and other countries where there were 18 deals worth an aggregate valuation of $1.96 billion completed.
<figure id="attachment_127485" aria-describedby="caption-attachment-127485" style="width: 1392px" class="wp-caption alignnone"><a href="https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg"><img loading="lazy" decoding="async" class="wp-image-127485 size-full" src="https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg?resize=640,181" alt="" srcset="https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg?w=1392 1392w, https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg?resize=300,85 300w, https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg?resize=768,217 768w, https://media.dealstreetasia.com/uploads/2019/03/CS-and-CB-Insights-illustration-of-completed-deals-by-countries-March-27-2019.jpg?resize=1024,290 1024w" sizes="(max-width: 1392px) 100vw, 1392px" data-recalc-dims="1" /></a><figcaption id="caption-attachment-127485" class="wp-caption-text">Source: Credit Suisse estimates, CB Insights</figcaption></figure>
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The report also noted that China’s spending in basic research as a percentage of GDP continues to lag behind other countries.
<figure id="attachment_127486" aria-describedby="caption-attachment-127486" style="width: 655px" class="wp-caption alignnone"><a href="https://media.dealstreetasia.com/uploads/2019/03/Basic-research-as-a-percent-of-GDP-CS-March-27-2019.jpg"><img loading="lazy" decoding="async" class="wp-image-127486 size-full" src="https://media.dealstreetasia.com/uploads/2019/03/Basic-research-as-a-percent-of-GDP-CS-March-27-2019.jpg?resize=640,657" alt="" srcset="https://media.dealstreetasia.com/uploads/2019/03/Basic-research-as-a-percent-of-GDP-CS-March-27-2019.jpg?w=655 655w, https://media.dealstreetasia.com/uploads/2019/03/Basic-research-as-a-percent-of-GDP-CS-March-27-2019.jpg?resize=292,300 292w" sizes="(max-width: 655px) 100vw, 655px" data-recalc-dims="1" /></a><figcaption id="caption-attachment-127486" class="wp-caption-text">Source: OECD, Credit Suisse</figcaption></figure>
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In view of the increasing growth in AI/big data applications in China, the public markets in China and Hong Kong have been revamping their listing guidelines with the proposed launch of the Sci-Tech Innovation Board in Shanghai, China. With this new proposal, the Chinese government is welcoming pre-profit innovative companies, red chips, and weighted-voting-right (WVR) companies to list on the new bourse. In Hong Kong, three changes adopted in 2018 were also well-received by companies and investors, including embracing pre-revenue early-stage biotech companies, WVR companies and a concessionary route to secondary listing.
The report has also highlighted some key trends in major sectors like the auto, fintech, internet, healthcare, and technology hardware which will likely see the most spending. One of the examples illustrated in the report showed that in the technology hardware, the analysts forecasted that the global AI market is expected to grow from $7.3 billion in 2018 to $89 billion in 2025, with a 45 per cent CAGR.
China’s AI market, which makes up about 12 per cent of the global market will likely propel the country to become a leader in AI by 2030. The expected growth is likely to be driven by strong venture capital (VC) investment, the largest number of smartphone users and strong talent base.
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China, 2nd largest source of unicorns , expected to see consumer internet sector continue to dominate while hi-tech sectors like AI/big data and biotech play catch-up.

Internet sector to continue to dominate Chinese unicorns, says Credit Suisse

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Internet sector to continue to dominate Chinese unicorns, says Credit Suisse

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