China’s private Big Tech firms remain the nation’s top innovators despite Beijing’s regulatory crackdown

China’s private Big Tech firms remain the nation’s top innovators despite Beijing’s regulatory crackdown

China’s private-sector enterprises increased their R&D expenditures last year despite muted growth amid a souring economy and geopolitical headwinds, according to the latest Top 500 China Private Enterprise ranking.

Although Huawei Technologies remained the country’s largest private-sector R&D spender, with a budget of 142.7 billion yuan (US$20.5 billion), it lost the No. 1 spot in revenue terms after a six-year reign amid US trade sanctions and a depressed market due to a lack of consumer appetite for always upgrading to the latest smartphone.

E-commerce giant topped the list for the first time with 951.6 billion yuan in revenue, followed by this newspaper’s owner Alibaba Group Holding, and textile maker Hengli Group.

“The overall size of the Chinese top 500 private enterprises is increasing,” said Huang Rong, vice-chairman of the All-China Federation of Industry and Commerce (ACFIC), the non-government business group that published the list, which excludes state-owned enterprises. “Tax contributions grew modestly and they are ramping up innovation and branding investments.”

Although Huawei slid to No. 5 based on its declining revenues, it was the only private-sector tech company to contribute more than 50 billion yuan in tax revenue last year, along with property developers Vanke and Country Garden

Despite a year-long regulatory crackdown that hampered growth and undermined profits, Chinese tech companies remain some of the country’s largest innovators. Behind Huawei, other big private sector R&D spenders last year included Alibaba and gaming and social media giant Tencent Holdings, with investments of 57.8 billion yuan and 51.9 billion yuan, respectively.

That was despite both Alibaba and Tencent posting flat or slightly lower revenue growth in the most recent quarter.

Private firms, which account for 97 per cent of the country’s registered businesses, contribute half of the country’s tax revenue, 60 per cent of GDP, 70 per cent of technology innovation and 80 per cent of urban employment, according to China’s Ministry of Industry and Information Technology.

The threshold for entry into the top 500 list increased to 26.37 billion yuan in revenue, an 11 per cent increase from last year. Combined revenues for the top 500 enterprises grew 9.13 per cent year on year to 38.32 trillion yuan, but net income for the group fell 12 per cent to 1.73 trillion yuan.

Almost one-fifth, or 88, of the top 500 businesses had more than 100 billion yuan in total assets this year, but overall asset value slumped by almost 18 per cent, reflecting the deteriorating Chinese economy.

The report also revealed that Chinese private enterprises saw declines in capital market fundraising and strategic investor onboarding of 33.85 per cent and 37.5 per cent, respectively, last year, amid investor concerns over issues such as Beijing’s zero-Covid-19 policy and geopolitical headwinds. (

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