Ecosystem for unicorns can unleash their potential

[Photo: China Daily]

China’s Government Work Report emphasized nurturing unicorn companies. The 21st Century Business Herald spoke to Cai Jiming, professor of economics and social sciences at Tsinghua University, on the prospects of unicorn enterprises in the smart economy. Below are excerpts of the interview.

Chinese AI unicorn companies still face weaknesses in basic research and original innovation. Most are concentrated in application-level innovation, a limitation that may become more pronounced with international competition.

Many unicorn enterprises continue to operate independently, and coordinated innovation among upstream and downstream companies remains limited. In some sectors, key components and raw materials still rely heavily on external sources.

The capital ecosystem is also not yet fully aligned with the needs of high-growth technology companies and financing structures require improvement. Regional development is uneven, with innovation resources concentrated in a few areas.

The government can promote the development of unicorn enterprises by establishing regulatory sandbox mechanisms in emerging sectors. Continued administrative reforms that streamline business registration and approval procedures, provide integrated government services, strengthen the social credit system and maintain fair market order would help unleash greater market vitality and social creativity.

Also, a tiered mechanism should be developed to provide precise support for unicorns. By improving the screening mechanisms for potential enterprises and introducing multidimensional evaluation criteria that don’t rely on single valuation indicators, governments can build dynamic incubation pools and implement targeted, case-by-case support policies throughout the entire corporate life cycle.

Dedicated innovation funds could be established to support basic research and key technological breakthroughs in priority areas, while providing targeted subsidies for research and development.

Unicorn enterprises should be encouraged to lead innovation alliances that create a cycle linking the demands of industries, technological breakthroughs and real-world application.

Meanwhile, the layout of scientific research infrastructure should be further optimized by expanding the coverage of national laboratories and research institutions, promoting open sharing of research findings and supporting enterprises in building key laboratories and innovation platforms.

Talent development is another crucial factor. Specialized talent programs can help attract leading scientists and innovative teams while encouraging universities to establish interdisciplinary programs aligned with strategic industries. Closer collaboration and talent mobility among universities, research institutes and enterprises will further strengthen the innovation ecosystem.

The development of unicorn enterprises requires a comprehensive capital ecosystem.

Financial institutions should be encouraged to guide social capital toward start-ups, with risk compensation mechanisms for angel investment losses and incentives for long-term investors such as insurance funds and pension funds to participate in the equity markets.

Banks can establish specialized technology finance divisions and offer products such as intellectual property pledge financing and supply-chain finance. Qualified companies can issue technology innovation bonds or green bonds, increasing the share of direct financing.

A more efficient mergers and acquisitions market would also enable listed companies and mature unicorn enterprises to pursue deeper strategic integration. Companies should be supported in raising funds through domestic and international listings. CHINA DAILY