Who are the top Chinese unicorns today?

Based on information from news reports and data aggregators including 36Kr, CB Insights and Hurun, the latest instalment of China’s Top 50 unicorns ranking is topped by Bytedance [as of June 2021].

Its valuation is now more than double that of Ant Group, the former head of the herd. Ant’s disastrous few months since November last year have been widely reported, with a much publicised speech by Jack Ma, one of its founders, triggering a furious response from the Chinese authorities. A dual listing in Shanghai and Hong Kong was blocked a few days ahead of its scheduled debut and the government instituted a major review of Ant’s business model, forcing it to contribute more of its own capital to the loans that it offers on its platform.

Ant is said to be hoping to revive its IPO by the end of this year. But its current valuation of about $200 billion is a third below the level that it hoped for last year.

Bytedance, the new number one in the rankings, has had a much better time of it. The eight year-old firm operates popular news aggregator Toutiao and the short-video platform Douyin, as well as Douyin’s sister app TikTok, which has a huge following internationally. 

A new trading platform established by the Nasdaq-listed website 36Kr saw three tranches of Bytedance’s unlisted shares put up for sale in June 2021 at a price that valued the firm at nearly $400 billion.

Bytedance’s ballooning value reflects a banner year in 2020, as well as its status as one of the few Chinese tech firms to enjoy massive success outside China. The Wall Street Journal reported last month that revenues at the internet and tech giant more than doubled to $34.3 billion last year, citing company sources. Gross profits rose 93% to $19 billion, although Bytedance has also announced that it has delayed its plans to sell its shares offshore “indefinitely”. 

Why the hold-up? Probably because of the chastening experience of ride-hailing platform Didi, which left our Top 50 ranking after an IPO in New York at the end of June.

The problems began almost immediately after Didi’s shares started trading, when Chinese cyberspace regulators blocked new registrations on Didi’s apps on the grounds that the company had ignored their requests to improve its data security. Didi’s stock plunged immediately, prompting howls of complaint from its new investors. Law suits are already underway.

Other Chinese companies have taken heed of Didi’s difficulties and chosen to delay their own preparations to sell shares in the United States. The paralysis in the pipeline of new listings seems likely to keep some of the Top 50 unicorns in the ranking for longer than they planned, although another possibility is that more of them choose to IPO in Shanghai or Hong Kong instead.

One contender for a mega listing in the months ahead could be SHEIN, now in third place in our ranking with a valuation of $47 billion. Although it is based in China, SHEIN isn’t well-known among Chinese consumers. But it has taken the rest of the world of online shopping by storm, shipping competitively-priced ‘fast-fashion’ apparel to customers in more than 200 countries. The US is its largest market, driven by savvy marketing to younger audiences on social media. In June 2021 SHEIN even overtook Amazon at the iOS App Store as the leading shopping app for Americans and it now holds the same title in over 50 countries.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.