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Mainland China's tech freeze: Unicorns in winter(2)
Kind: ICD What's New  Organization: Department of International Cooperation  Publish Date: 2019-11-12 15:41
Startups looking for early-stage investment have felt the capital winter most keenly. Investors are advising them to expect as little as half the valuation. Deals are taking longer. A round of funding once raised within a month is now taking up to six.

Response measures adopted by enterprises include: trimming existing workforce or reducing new hires (for example, job openings in the Internet sector fell by 40% in the first quarter of 2018), and reducing operating costs (for example, growth in online ad budgets dropped from 30 percent over the past two years to 17 percent this year; Didi Chuxing, a ride hailing giant, halved year-end bonuses for staff). Many of mainland China's unicorns are deciding to expand in second-tier cities such as Wuhan, Chengdu and Xian, instead of in Beijing, Shanghai, and Shenzhen, driven by a need to reduce operating costs. For instance, Xiaohongshu, a popular social network for fashion and beauty products, made the move to Wuhan in 2017 from its base in Shanghai. It attracts top talent to relocate by offering high salaries. Inland cities are also actively working to lure talented young Chinese, offering housing subsidies and relaxed rules on household registration.

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

Update: 2020-04-23
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