Everyone is familiar with industry leaders like SAIC, COFCO, and BOE, but have you heard of Changhong Energy, BOC Battery, or Pangu Intelligence? Try searching your memory—you’ll find it hard to come up with an answer…
These companies aren’t “aircraft carrier”-sized; they lack household-name brands and may seem unremarkable at first glance. Yet they possess cutting-edge technology, hold significant market share in specific niche sectors, and serve major global industry leaders—making them the “prized targets” of investment promotion campaigns across regions. These are the “hidden champions.”
In investment promotion, the ability to identify “hidden champions” and pinpoint the “kings” of the upstream and midstream segments of industrial chains is indispensable for investment promoters. It’s akin to knowing not only Yagor and Hailan Home but also being familiar with manufacturers of buttons and zippers. As a government, how should we help “hidden champions” step out of the shadows and into the spotlight, assisting them in breaking through their growth ceilings?
Where Are "Hidden Champions" Abundant?
Hidden champions remain hidden because they span a wide range of sectors, have low public visibility, and quietly and modestly serve as the foundation and supporting players for industry leaders.Commonly mentioned terms like “Specialized, Refined, Unique, and Innovative ‘Little Giants’,” “Single-Champions,” and “Gazelle Enterprises” all belong to the ranks of “hidden champions,” albeit at different stages of development. Surprisingly, beyond Beijing and Shanghai, this ecosystem also includes cities like Ningbo, Qingdao, Xiamen, and Dongguan, which, like a network of capillaries, densely interweave to form the regional industrial ecosystem.
As shown in the chart, Ningbo, Shenzhen, and Chengdu dominate the top three spots in terms of the number of "Specialized, Refined, Unique, and Innovative" "Little Giants," with Qingdao and Xiamen close behind. Among them, Ningbo alone accounts for 182 such enterprises. In Ningbo, Bodegao Technology has demonstrated the precision of modern industry with "a single thread." Its cutting wire, with a diameter just one-sixth that of a human hair, serves as a critical component in precision equipment such as watches and aircraft engines.Tiansheng Sealing Parts is a private enterprise in Ningbo with fewer than 100 employees. After 26 years of R&D, it developed the “C-type sealing ring” to replace imported products, which is now widely used in the construction of ships, nuclear power plants, and military equipment. If we expand the scope to include the number of enterprises, we can also see Shenyang and Xinxiang.Take Xinxiang, for example. As a prefecture-level city in Henan, it may not stand out in terms of regional prominence or the number of high-tech enterprises. However, through a decade of consistent cultivation, 36 national-level “specialized, refined, distinctive, and innovative” (SED) “little giant” enterprises have emerged.
Single-champions typically focus on one or two specific fields for over a decade, serving as the vanguard and trailblazers of manufacturing development. You might assume that the provinces leading in single-champions are either the Pearl River Delta or the Yangtze River Delta—but who would have thought it would be Shandong? To date, Shandong has 109 manufacturing single-champion enterprises, far surpassing Zhejiang and Jiangsu.Even more astonishingly, within Shandong Province, Weifang is the prefecture-level city with the most manufacturing single-champions. This has brought Weifang ever closer to joining the “trillion-yuan club” and has firmly established the slogan: “Look to Shandong for national manufacturing; look to Weifang for Shandong’s manufacturing.”
Identifying Investment Trends Through the Phenomenon
If leading enterprises are the “pillars” of investment promotion, then “hidden champions” are the indispensable “backbone.” It is clear that many of these “hidden champions” did not originate in first-tier cities but emerged from third- and fourth-tier cities through a remarkable transformation. Today, the patented products of some of these companies are found worldwide. Therefore, investment promoters need not limit their focus to first-tier cities, competing in the “fiercely competitive” markets of Beijing, Shanghai, Guangzhou, and Shenzhen. Instead, they should delve deeply into niche sectors of leading industries and expand their reach to include leading enterprises along the industrial chain. By adhering to the principles of strengthening what is strong, attracting what is lacking, and supplementing what is weak, they can foster more projects to “connect” along the industrial chain. As investment promoters, simply relying on the geographical distribution of “hidden champions” to adopt a passive, “wait-and-see” approach to territorial battles is far from sufficient. The crucial question is: how do we identify and seek out these “hidden champions”?
Customized Technology as the Foundation
The distinction between “hidden champions” and ordinary enterprises lies primarily in their technology-driven approach: continuously expanding markets within specific niche sectors while focusing on critical links in the value chain. Imagine using a convex lens to concentrate sunlight onto a match—over time, it will inevitably ignite. The expansion of such companies typically involves establishing subsidiaries, continuously researching industry applications, catering to market demands, and engaging in customized production and design. In particular, precision cutting tools are not only the most fundamental components in manufacturing but also serve as the “industrial teeth” for aircraft, automobiles, and large-scale equipment. Since precision requirements vary across different sectors, on-demand customization is precisely what sets “hidden champions” apart.
Unparalleled Per-Capita Patent Count
The core strength of “hidden champions” lies in their R&D capabilities; their average number of patents per employee is five times that of their peers, and they outpace competitors through incremental innovation. At the same time, the tenure of corporate decision-makers exceeds 20 years; they maintain close ties with downstream enterprises and often do not outsource projects at all. Therefore, investment promoters can trace suppliers backward from downstream demand to identify hidden champions in niche sectors. There was once a well-known computer company that, in an effort to reduce costs and improve efficiency, outsourced its mainframe circuitry to a Chinese firm. Seeing positive results, it then outsourced motherboard production as well. But once all core value had been outsourced, what was the point of its own existence? Consequently, this company declined, while the Chinese firm that took on the outsourcing grew into a “hidden champion.”
Cross-Industry Expansion and Global Benchmarking
One out of every eight batteries worldwide comes from China Silver (Ningbo) Battery Co., Ltd.; over 90% of global sewing machine manufacturers use rotary shuttles made by Deying Precision Machinery Co., Ltd., which accounts for 40% of global production. Their excellence in manufacturing a single component stems not from a rigid adherence to craftsmanship, but from a commitment to localization that keeps pace with the times. The growth trajectory of “hidden champions” typically centers on niche markets: first narrowing their focus, then expanding globally to become pioneers in international markets. Beyond flourishing domestically, they are gradually replacing imported products to dominate the global market.
The Government’s “Visible Hand” Loosens the Soil and Applies Fertilizer
1. No single step can reach the horizon—gradual, tiered cultivation
The emergence of “hidden champions” is not an overnight feat; it requires a growth process. Localities identify high-quality enterprises within their core industrial chains, analyze their respective strengths and weaknesses, and establish talent pools for enterprises such as “small-to-medium enterprises (SMEs) transitioning to larger-scale operations,” “high-growth enterprises,” “specialized, refined, distinctive, and innovative enterprises,” and “small giants.” Through tiered cultivation, the leading role of “hidden champions” in technology and standards is leveraged to promote coordinated development among various enterprises and across the entire industrial chain. The government must provide a fertile “soil” for the survival of “hidden champions,” rather than merely listing those that have “surfaced.” What is most needed now is to directly grant preferential treatment to small yet high-quality enterprises based on yield-per-acre evaluation criteria, enabling them to grow from small to large, transform from weak to strong, and achieve quality upgrades.
2. Seeing Through Three Layers of Walls—A Forward-Looking Perspective
With the upgrading of economic and industrial structures and the transformation of the energy mix, emerging industries led by photovoltaic power generation, energy storage, and new materials are developing rapidly, giving rise to the concept of leading enterprises in these sectors. These leading enterprises are often hidden in small county towns, quietly amassing wealth by leveraging unique regional and industrial advantages. Currently, Bozhou has capitalized on its status as a major production area and trading hub for medicinal herbs to break through strongly in the midstream of the traditional Chinese medicine industry chain, becoming a city of "hidden champions."Fugu County in Yulin dominates half of China’s magnesium industry. Although it does not produce magnesium ore itself, its strategic location at the junction of magnesium ore deposits in Shanxi and Inner Mongolia allows it to use the “Pijang process” to refine magnesium, supplying 42% of the world’s magnesium. Therefore, whether through policy support or capital investment, these enterprises require long-term, patient nurturing to grow; they should not be exploited to the point of exhaustion while they are still small.
3. Sailing Overseas on Others’ Vessels—The Escort Model
Most German “hidden champions” have established a presence in over 50 countries and regions worldwide, whereas the majority of Chinese “hidden champions” operate overseas in only a few countries. This indicates that Chinese “hidden champions” are in the early stages of internationalization; expanding into international markets represents one of their primary future challenges. "Hidden champions" occupy leading positions in their markets and hold irreplaceable roles in global industrial chains. As they grow, local governments can connect them with international channels. From product marketing to financial support, collaboration between government and capital is essential to allow these enterprises to focus on innovation within their niche sectors and secure a dominant position in the global market.
Conclusion
"Hidden champions" lack high-profile brands or the celebrity status of their founders, yet they have seized the initiative in the market and become dominant players in their respective niche sectors. Whether it be the government or capital, we must keep our eyes open to identify these unsung heroes rooted in local markets, provide them with genuine support and nurturing, and enable them to break out of their niche and succeed on a broader stage through their own merits.
