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Mainland China's tech freeze: Unicorns in winter(1)
Kind: ICD What's New  Organization: Department of International Cooperation  Publish Date: 2019-11-11 17:15
According to a recent report by The Economist titled "China's tech freeze: Unicorns in winter," there has been a chill sweeping through mainland China's technology industry. The lavish financing that promising startups have come to expect has dried up. Job cuts have multiplied. Even mainland China's tech giants have not been spared and are slashing bonuses and travel expenses, and are even moving from first-tier cities to second-tier cities in order to save costs.

Mainland China once had the title of "breeding ground for unicorns." According to Preqin, a data provider, more money was raised for venture-capital funds in mainland China in the first half of 2018 than in the United States, the first time that had ever happened: US$56bn compared with US$42bn. As a result, the number of unicorns in mainland China began to increase.

Mainland China's stock market plummeted in the second half of 2018. The country lost around 160 billionaires to last year's stock market slump. Meanwhile, business in the three months to December was at its lowest in six quarters. Plus, Ofo, a bike-sharing unicorn that received US$2 billion in a first round of fundraising, collapsed due to excessive expansion; the real estate unicorn Aiwujiwu laid off nearly 400 employees. By February 2019, Aiwujiwu officially shut down. Investors have grown cautious about tech companies. During the last three months of 2018, deals to commit venture capital to young firms slumped in number by two-fifths, and private-equity financing dropped by more than a quarter.

Source: The Economist(03/09/2019); Economy Daily News(2019/02/22)

Update: 2020-04-23
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