The global pandemic came with unprecedented changes that impacted economies all over the world in 2022. The resulting new economy has become an essential force for China in mitigating risks and strengthening the resilience of its economic development.
With the help of macro policies, an increasing supply of talent in the new economy, more investment in research and development, and breakthroughs in key technology, the added value of the new economy (dubbed the “New Three” due to the inclusion of new industries, new formats, and new business models) was RMB 19.7 billion (USD 2.92 billion) in 2021, up 16.6% over the previous year, higher than GDP growth in the same period and accounting for 17.25% of GDP according to the National Bureau of Statistics.
In the new economy, the digital technology, biomedicine, and new energy industries in particular are developing rapidly, and enterprises that rely on technology to achieve breakthroughs have become an important driving force for innovation in production models, factors, and efficiency.
36Kr Research Institute used its database to screen new economy enterprises that have raised funds, have a valuation of more than USD 300 million, and are actively developing new technologies and innovative business models and exploring new markets in 2022. A comprehensive evaluation system was established, rating companies according to five primary indicators and 33 secondary indicators. Of these, 500 were selected to form the list of China’s top 500 new economy enterprises in 2022. The following is a summary of the full report on these enterprises:
AI and new energy industries see strong growth
The 2022 Top 500 New Economy Enterprises list now covers 33 industries, with a change rate of 8.8% compared to 2021. Like the previous year’s list, healthcare, digital entertainment, enterprise services, AI, and e-commerce were the most prevalent sectors. The top ten industries accounted for 72.4% of the list, a slight decrease from 2021
AI and new energy industries saw an 80% and 140% increase respectively, mostly driven by government policy and market demand. This led to the establishment of many innovative and profitable companies in 2022.
Industry clusters forming in Beijing, Shanghai, and Guangzhou
Regions like the Yangtze River Delta, Beijing-Tianjin-Hebei area, and the Guangdong-Hong Kong-Macao area form the main hubs for most of these new economy enterprises.
Of these enterprises, about 36% are located in the Yangtze River Delta alone. Within the region, Shanghai forms the core, with mostly healthcare and AI enterprises. Zhejiang and Jiangsu are also upcoming economic powerhouses, with the former taking the lead for digital entertainment and new energy vehicle companies and the latter focusing on the medical and healthcare fields.
Another 30% are in the Beijing-Tianjin-Hebei area, but most are in Beijing itself. The city has the largest concentration of new economy enterprise headquarters, including 23 digital entertainment enterprises.
Finally, another 18% are in the Greater Bay Area of Guangdong, Hong Kong, and Macao, with both Shenzhen and Guangzhou as the cores. Shenzhen has seen much more development—with at least three times as many new economy enterprises—compared to Guangzhou.
Other areas of China are also making progress. The Chengdu-Chongqing region, for instance, has a long way to catch up with its more developed counterparts but is showing promise as a hub for new economic growth in western China.
Overall market valuation is shrinking, but some industries demonstrate growth
In 2022, the overall market valuation of the top 500 new economy enterprises shrank by nearly 20% compared with that of the previous year. However, some industries showed strong growth. The digital entertainment, e-commerce, and new energy vehicle industries in particular took the lead, with the market valuation ranking of the new energy vehicle industry in particular significantly improving compared to last year. The new economy enterprises in Guangdong Province, Beijing, and Zhejiang Province have the largest market valuation, accounting for 68.4% of the nationwide total.
Most new economy enterprises are entering late-stage financing
Most of the top 500 new economy enterprises achieved long-term development through equity financing, with financing rounds beyond Series A. Among them, about 85% of the companies entered the Series D round and subsequent financing stages, IPO, or the post-IPO stage. This shows that the business models, profit models, and internal innovation and management models of the top 500 new economy enterprises are relatively mature and recognized by the primary and secondary markets.
The intelligent logistics, software services, new consumption, and AI industries have shown promising growth, with large enterprises in the early and middle stages of financing, and more newcomers entering the scene.
Outlook for the development of the new economy in China
The overall outlook is positive, with more new companies following in the footsteps of the current top 500 new economy enterprises. Based on current patterns, Beijing, Shanghai, Guangzhou, and Zhejiang are projected to continue leading the way, while core cities in central and western China will work to achieve decentralized development.
Consolidation will be a key strategy for micro-entities, which will allow them to capitalize on their advantages and achieve long-term resilience that can withstand the peaks and troughs of industry cycles.
For more information, the full version of the 2022 Research Report on the Development of China’s Top 500 New Economy Enterprises is available for download via the form below (in Chinese only). The report will address the following questions:
■ What opportunities and challenges does the external environment bring to new economy enterprises in 2022?
■ What industries are the top 500 new economy enterprises of 2022 involved in, and what development characteristics do the most common industries have?
■ What are the changes in the overall market valuation of the top 500 new economy enterprises of 2022? Which industries are becoming more attractive?
■ What are the characteristics of the development of the new economy in different regions in 2022?
■ What are the characteristics of the financing of the top 500 new economy enterprises of 2022, and how does the financing differ in each industry?
■ What are the core competitiveness and innovation strategies of the leading and emerging new economy enterprises of 2022?
■ In the future, which industries and regions will have more new economy enterprises? How can new economy enterprises consolidate and capitalize on their advantages?
This article was based on an insight report by 36Kr Research Institute. 36Kr Global is authorized to translate, adapt, and publish its contents. This report is for research purpose only and constitutes no investment advice.