Illustration: Liu Xidan/GT

China's "little giants" - small and medium-sized enterprises (SMEs) that boast cutting-edge technologies and specialize in niche sectors - each held an average of 26.6 invention patents and invested more than 30 million yuan ($4.24 million) in research and development in 2024, the Xinhua News Agency reported on Tuesday. By strengthening their core capabilities through innovation, these "little giants" have demonstrated significantly enhanced competitiveness, increasingly becoming a key driving force for the country's high-quality economic growth.

Amid external technology restrictions and internal economic restructuring, the strong momentum of China's "little giants" signals that Chinese industries are entering a new stage of technology-driven, systematic innovation with growing industrial resilience.

During the 14th Five-Year Plan (2021-25) period, the number of China's "little giants" grew from more than 5,000 to 17,600, according to the Ministry of Industry and Information Technology (MIIT). What factors have supported the rapid growth and significant enhancement of the innovation capabilities of these SMEs? Some concrete examples might provide valuable clues.

HiDream.ai, a "little giant" company that rose to the forefront of global generative artificial intelligence (AI) start-ups in just two years, in 2024 secured a sizable Series A round fundraising, with state-owned Hefei Industry Investment Group being the lead investor, joined by the Anhui AI fund of funds and other institutional investors, Xinhua reported in July.

Amid shifting international investment dynamics, robust investment support in China has directly fueled the boom of tech innovative and specialized "little giant" enterprises. Beyond financing, China's industrial ecosystem, policy framework, and business environment also play key roles in driving this surge in innovation.

China's national high-tech zones are home to 46 percent of China's specialized and innovative "little giant" enterprises, according to data from the MIIT. From Anhui Province to Jiangsu Province, local high-tech zones focus on providing preferential policies and services for innovative enterprises, offering targeted support to address challenges at different stages of their development and help them grow.

The rapid expansion of "little giant" enterprises, particularly their concentrated growth in high-end materials, key components, industrial software, and intelligent equipment, indicates that despite unreasonable technology restrictions by certain foreign countries, China is steadily strengthening and upgrading its comprehensive industrial chain. Its ability to proactively build core competitiveness is making increasingly significant progress.

These "little giants" are deeply embedded in and help strengthen the backbone of China's manufacturing sector. More than 60 percent of the specialized and innovative "little giants" focus on foundational industrial fields, nearly 80 percent are positioned in key segments of major industrial chains, and 90 percent provide direct support to at least three well-known domestic or international large enterprises. The rise of "little giants" reflects, at a deeper level, China's strategic shift in its role within the global industrial chain.

Amid increasingly intense international competition, future competitive advantages will inevitably stem from technological innovation and deep cultivation of niche markets. Specialized and innovative enterprises are at the heart of this transformation. Leveraging their unique strengths of specialization, refinement, uniqueness, and innovation, they are substantially driving China's industries to shift from scale-based advantages toward quality and value-based advantages, securing a more proactive and advantageous position in the global value chain.

According to a joint notice issued by China's Ministry of Finance and the MIIT in 2024 on further supporting the high-quality development of specialized and innovative SMEs, China is supporting "little giant" enterprises in creating new growth drivers, tackling challenges to master new technologies, developing new products, and strengthening industrial support capabilities, with a focus on breakthroughs in key core technologies.   

The growing innovative capability of China's "little giants" represents the shift from scale advantage to quality and value advantage of China's industrial system. This process is expected to translate into a more technologically sophisticated, resilient, and globally competitive industrial base, positioning the country to better withstand external pressures and to maintain sustainable, high-quality economic growth.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn