Hurun Research Institute, the firm which creates China’s wealthiest individual lists has released its country-wide unicorn index for the first quarter of 2019 on May 7.

The new report titled “Hurun Greater China Unicorn Index 2019 Q1” mentions that China added 21 new unicorns in the first quarter, that is twice as many unicorns as in Q4 2018.

Among these 21 new unicorns, fashion clothing ecommerce Shein, apartment management platform Danke Apartment, IoT solutions provider Tuya Smart, autonomous driving startup Pony.ai, and media company XinChao are leading with over US$10 billion valuations.

The report also notes that the unicorns mostly derived from both AI and logistics fields, such as autonomous driving startup Pony.ai and B2B logistics startup Lalamove.

Hurun, the Chairman and Chief Investigator of the institution noted that “the number of unicorns in China has surprising exceeded 200, which is almost ten times that of India. At this time, China should be the first place in the world in terms of the number of unicorns.”

Rupert Hoogewerf, a.k.a Hurun – Chairman and Chief Investigator of Hurun Report

Of course, this wouldn’t have been so successful without capital funding from investors. In terms of unicorns breeders, Sequoia Capital has been the most successful with 53 unicorns in its portfolio. This is followed by Tencent and IDG, with each having invested in 31 and 25 unicorns respectively.

In terms of exits, the Hong Kong Stock Exchange and Nasdaq board have also witnessed the most listings of China’s unicorns in the first quarter of this year.

A total of five unicorns listed successfully on the list, including Maoyan Entertainment, Futu Securities, CStone Pharmaceuticals, Tiger Broker, and Weimob.

China now has 202 unicorns

Hurun Greater China Unicorn Quarterly Index from 2018

The biggest news after all, is that China now has a total of 202 unicorns. Among the startups, the total valuation of internet services companies topped the list with over 1.6 trillion yuan (about US$232 billion).

From the 202 Chinese unicorns, 42 are involved in the internet services sector, including ecommerce giant Alibaba’s Ant Financial with a US$1+ trillion valuation, Bytendance with a US$500+ billion valuation, and Didi with US$300+ billion valuation.

But aside from the Unicorn Index, the startup has also published its first Hurun China Future Unicorns 2019 Q1 listing another 70 high-growth enterprises from emerging industries.

These seventy potential unicorns are most likely to be valued at US$1 billion in the next three years, with 66 percent of the startups coming from Beijing and Shanghai.

In 2018, Hurun reported that a new unicorn was minted approximately every 3.8 days in China, making for a total of 97 new startups worth US$1 billion.

Though everything is looking to be on a good start with the results from the Q1 2019 report, Hurun said not to be overly optimistic as he estimates that 20% of current unicorns could eventually fail.

Also, Hurun’s methods of calculating unicorns aren’t exactly undisputed. By contrast, China Money Network’s calculations noted the number of new unicorns in 2018 at just 25.

A March Credit Suisse report also warned that despite the prominence of tech unicorns in China, the percent of firms in advanced fields including AI, big data, and robotics still well lagged behind US figures.

It’s all in the past. The days when China was associated with sweatshops and cheaply manufactured labels. Although journalists are still reporting cases of child labor and unsatisfactory workplaces in China, the three words – Made in China no longer represents the country

The negative connotations which represent the exploitation of its high population demographics and low-wage advantage have brought forth the country rapid development and now the country is sitting on the laurels of high growth.

Though we may still laugh at the labels of misspelled or wrongly translated English, it no longer bears the same weight. China now represents one of the largest ecommerce markets, rivaling the United States.

In fact, Emarketer.com evaluated the total retail sales of different countries and discovered that both United States and China’s online business take one-fifth of the world’s digital sales share.

And despite the fact how American giants like eBay and Amazon technically built the ecommerce industry, the Chinese ecommerce players are gradually taking over.

E-COMMERCE IN CHINA IS A HUGE BUSINESS

Source: amnaymag.com

Over the past five years, e-commerce growth in China has exploded – accounting for an average of 43 percent growth, with online sales now representing one-fifth of the total retail. This is just products. Consumers are also increasingly buying experiences and services online.

The development of ecommerce also extends to export as statistics from JD.com shows that Chinese-made products, including popular smartphones like XiaoMi, sports equipment like Li-Ning, and household appliances like Midea are sold to more than 200 countries and regions in the world.

In fact, according to a report by China’s Ministry of Commerce, the export transaction for China’s cross-border ecommerce has reached an amount of 2.75 trillion yuan, that is about US$415.3 billion in just the first half of 2017.

Chinese electronics giant Hisense also disclosed that 520,000 of its televisions were sold out in less than 24 hours during Black Friday in the United States.

Although this growth is partly attributed to China’s population size and the rise of urban middle class. A key characteristic to this strong ecommerce market in China is still due to the innovations are seen in Chinese ecommerce startups.

LIVESTREAM CAMPAIGNS AND BRANDING PLATFORM

Source: jingdaily.com

While Amazon may have invented our online shopping addiction. China is where it is taken to the next level. Take China’s online retail giant Alibaba and its online platform Tmall for example.

Tmall is a virtual shopping mall and every brand has an official store page, complete with videos and interactive content. There is usually a standard format, but the page can be customized to fit every retailer’s unique needs.

Cosmetic brands, for instance, can livestream their makeup tutorials along with their products.This makes shopping online as engaging as shopping in person while educating users about their product without the need to leave the comfort of their home.

This serves not just as a point-of-sale, but also a key branding platform through real-time engagement and an extra layer of interaction.

EXPANDING TO PHYSICAL STORES

Source: China Plus

While ecommerce sales are on the rise, majority been pouring are still made in real life, Knowing this, Alibaba and its smaller rival JD.com despite making about 80 percent of ecommerce sale, have both been pouring billions into physical retail.

In the last two years, Alibaba has spent billions of dollar in establishing a physical footprint that includes a grocery store chain, a luxury shopping center, as well as their own branded mall in Jack Ma’s hometown of Hangzhou. Recently, Alibaba has even made a single US$29 billion investment in hypermart operator Sun Art.

REVOLUTIONIZING OFFLINE RETAIL

The thing is Chinese ecommerce are not just expanding to physical retails but rather revolutionizing the way it works. In last year’s Taobao Maker Festival, Alibaba featured two new technologies to disrupt the offline retail space.

First, it was embracing the new retail strategy where big data technology connects and optimizes offline outlets and online stores to enhance customer experience. Second, the ecommerce giant released an experimental cashierless store called Tao Cafe and smart speaker Tmall Genie.

Competitor JD.com also sees the future growth is offline given their release of Take, a new technology tool for physical retailers. By combining online shopping trends with sensors in-store, the tech aims to provide better insights into offline shopping behavior.

REINVENTING CULTURE THRU 11.11

Source: alizila.com

While there’s Black Friday and Cyber Monday in the United States, China has Single’s Day, otherwise known as the Double 11 shopping festival with big deals and promotions. The founder of the holiday was Tmall’s CEO Daniel Zhang, as a way to make single people less lonely.

But soon the holiday has blossomed into the world’s largest single shopping date exponentially. For comparison, Alibaba’s 2017 total sale was RMB 162.8 billion, which translate to roughly US$25.3 billion, and is more than Cyber Monday and Black Friday combined.

Another significance for Double 11 is not just its sales, but rather the date has morphed into an important multi-day shopping festival complete with a live stream gala event featuring Jack Ma dancing to Michael Jackson, an interactive runway show, and a new retail dream. It’s not just another day of sales.

CO-BRANDED PARTNERSHIPS

Source: cnbc.com

A newer trend that has crept up in China is the symbiotic partnerships between e-commerce platforms and brands in terms of distribution and design.

Especially on big shopping occasions, it is not uncommon for e-commerce platforms to set up pop-up shops in high traffic locations — usually with brands that do not have physical locations of their own. The goal is to provide a hands-on shopping experience and then purchase online.

For example, the collaboration between Beats by Dre and Tmall has popped up that lets users experience the power of the new Beats noise-canceling headphones by simulating what they would feel like on an airplane. There is no cash register in the store, just tablets to place your order via Tmall and have them delivered to your home.

Another example of partnership is in the form of exchanging data for intellectual property. Mattel, whose brands include Barbie and Hot Wheels has inked a deal with Alibaba, to exchanging browsing behavior to inform new product designs, as well as selling its products to Chinese consumers on Tmall.

ECOMMERCE SITES FOR EXPLORATION

Ultimately, the design of ecommerce sites in China has made their shoppers treat e-commerce platforms as more than just another purchase platform, they do not just visit it during sales day.

Chinese consumers head on to ecommerce site for exploration and discovery, it’s just like going to the mall but just at the comfort of your home. At times, they even go online just to see what’s new or trending, not just when there’s a need to purchase.

In the years ahead, with the innovative streak presented by China’s ecommerce platforms, it is most likely that one day a change of dynasty will arrive.