China’s Newly Added Unicorns in One Year Are Less Than 10% of the U.S.—Is China Out of Growth ‘Wind Currents’?

Since the concept of “unicorns” was introduced in 2013, it has always attracted widespread attention, because it represents, to a certain extent, a country’s level of technological innovation and the quality of its economic development.According to the Hurun Global Unicorn List, in 2019 China had 206 unicorns while the United States had 203 — China even had more than the U.S.But by 2023, China had 340 unicorns, which is still less than half of the U.S., which had 703.Last year, more than 500 unicorns were newly added worldwide, yet China added only 15, while the U.S. added 179 — less than one tenth.In just a few years, the gap has widened so dramatically.So what are the main reasons behind the decline in newly added unicorns in China?In my view, there are influences from both domestic and international macro environments, as well as problems within enterprises themselves.For a company to grow from birth into a star enterprise is extremely difficult.From 0 to 1, it must cross the “River of Hell”;from 1 to 10, the “Valley of Death”;from 10 to 100, the “Darwin Sea” — multiple life-or-death checkpoints.Yet even after growing large, many companies still gradually decline due to various reasons.Today, we will look inside the enterprise itself and explore how those former stars eventually failed and fell.Chasing the Wind — and What Remains After the Wind Passes.A “wind outlet” (fengkou) refers to a business direction that can make money.Everyone has heard the old saying: “When the wind blows, even pigs can fly.”

But in reality, every wind outlet is a harvesting ground for those who create the wind, and a meat grinder for those who merely follow it. In the end, one person succeeds while thousands perish.Over the past decade, the capital markets have been swirling with undercurrents. Big winds were followed by small winds, each dominating the stage for a year or two:From O2O to P2P to B2B.From shared bicycles to shared power banks.From VR/AR to the Metaverse.From video streaming to short video.From consumption upgrading to consumption downgrading.From semiconductors, biotech, new energy.to today’s blazing artificial intelligence.All of this deeply illustrates the meaning of: There is nothing new under the sun.Every wind outlet goes through the same rise and fall:We watch it build grand mansions,watch it entertain nobles,and then watch it collapse —a profound performance of human craving, anger, and ignorance.Take new energy vehicles as an example.The bullet of “new energy” has been flying for a long time.Today, as the market advances rapidly, some rejoice while others suffer.Companies that once stood under the spotlight — Evergrande Auto, HiPhi, Byton, Singulato, Leiting, Baoneng Auto — have either filed for bankruptcy or fallen into crisis.These were companies that had raised tens of billions in financing.Many were blinded by capital, mistook industry opportunity for their own capability, expanded blindly, burned cash wildly, fought on volume, fought on price, fought on channels.

Promotions, cost reductions, reforms, sinking into lower-tier markets, going abroad, upgrading — every trick in the book was used, and yet the result was chaos.Only a handful of leading companies survived after the wind passed, forming a long-term stable pattern.Looking at AI investment in the last two years:Infrastructure, technology, and application layers are all red-hot.Although AI currently has high capital barriers, difficult commercialization, and distant profitability, how many of those invested still remember the investing principles they once revered?As of now, China has more than 200 domestic large models, and over 100 models exceeding 10 billion parameters.The current “hundred models war”—where prices keep dropping or models are offered free—is eerily similar to the “hundred group buying war” of a decade ago.The result will likely be the same.Just like Lashou and WoWoTuan, after burning massive cash, most died on the battlefield.Winners took all, leaving only Meituan Dianping alive.The disillusionment moment is approaching.Blind Diversification.Products and services are the bridge connecting companies to customers.Whether a company can truly be customer-centric ultimately depends on whether it is focused on improving those products and services.A third-rate company profits through cost cutting.A second-rate company profits through technology.A first-rate company profits through standards.In an era of overcapacity, only deep focus can give a company industry discourse power, pricing power, and the power to set rules.

As the saying goes:“When the boss lacks ability, he diversifies.”Every person and every team has their own capability circle, trapped in their information cocoon, thinking within their own cognitive channel.As a company grows, managers tend to overestimate their own capability and want to “make money from every corner of the world.”Their attention disperses uncontrollably.As amateurs switching fields to compete with professionals, the outcome is almost always a slow decline.Evergrande Group is the textbook case.Excessive non-core diversification became the main cause of its collapse.Besides its real estate business, Evergrande invested in:automobiles, mineral water, finance, internet, tourism, culture, sports…but these sectors made almost no contribution to revenue, worsened cash flow, and reduced solvency.The most typical examples are Evergrande Spring water and Evergrande Auto — both treated like real estate projects.They spent huge sums on marketing even before production lines existed—massive waste of resources.Many other companies collapsed for the same reason:LeTV, Suning, Dongxu Optoelectronics, Giant Network, Aido, Dunan Group, General Electric… all sank into the mud of diversification.From their development paths, I summarize a propagation chain:Diversification → aggressive financial strategy → industry downturn / failed transition → capital shortage / break → full crisis.Although there are rare lucky ones, failures are far more common.Microsoft focused on desktop OS.

Intel focused on microprocessors.Coca-Cola focused on cola.Howard Schultz focused Starbucks on coffee.Only through focus did they dominate their fields.Academic Thinking Is Not Commercial Thinking.“We take national science funds and never think about making money!”This is something a famous professor once joked… or sighed.Our fund invested in a new materials project led by a well-known professor from a southern university.Technically impeccable, once rated as a top project.But several years later, project performance deteriorated, and under the agreement, we required the founding team to buy back the project.Professor’s comment revealed a truth:Academic research thinking and business thinking are worlds apart.The government has encouraged professor entrepreneurship by granting intellectual property rights or long-term use rights.According to the “2024 H1 China University Professor / Scientist Entrepreneurship Investment Report,”158 financing events were completed by professors or scientists across 51 institutions — nearly 7% of all deals.But from past results, professor-led startups have low success rates.Their teams usually look like this:Professor as chairman.Their own students or researchers as CEO.R&D full of their graduate students.Technically, they may be giants.Commercially, they are inexperienced and underprepared — especially in:organization, management, commercialization, and market expansion.At the same time, they still have to teach, do research, and even set up separate companies for each research result.How much energy can they devote to running a business?

Another company I have followed, an electronics components manufacturer, was also founded by a tech professor.He pursued technological breakthroughs but neglected commercialization.Even when leading electronics manufacturers sought cooperation, he turned them away.The truth is:Most customers only need consistent quality, high yield, and low cost — not absolute cutting-edge tech.For enterprises, the first principle is simple:Be profitable, and survive long-term.Chasing Quick Money → Lack of Entrepreneurial Spirit.Two years ago I met the founder of a hundred-billion private equity firm.His investment style lacked any sense of serving the real economy, supporting technological progress, or promoting industry development.He preferred quick-in quick-out speculative projects.In the past decade of prosperity, this made him extremely rich.But last year, after several failed investments, he absconded overseas with funds.For me, it was shocking… but not surprising.Quick money feels good —but the risk is enormous, and one mistake can wipe everything out.Regional private lending in Jiangsu/Zhejiang once carried annual rates above 50%.Many entrepreneurs thought lending was more profitable than real industry.Results?Interest impossible to collect, principal often gone.Take Secoo — once “China’s first luxury e-commerce stock.”Financed 4 billion in 10 years, including IDG, Ping An, JD Tech, CVC, etc.Due to poor management and market shifts, it faced severe cash flow rupture.Instead of saving the brand, it chose to cheat customers — taking orders without delivering or refunding.

Even today it still sends promotions and even launched a “707 Anniversary Sale” — self-destructive behavior taken to the extreme.Another case: Guirenniao — once China’s most valuable sportswear brand.At its peak, market cap exceeded 45 billion yuan, surpassing Li-Ning and Anta.But despite massive capital and aggressive acquisitions, it kept expanding without refining operations.When the market deteriorated and finance tightened, it collapsed.Its stock fell below 1 yuan for two months and was forced to delist.Overdependence on a Single Channel or Resource.A friend invested in an oral-care company, which quickly entered Walmart, Yonghui, Hema, Carrefour, Watsons, etc.But its online channel development lagged badly.As competition intensified, new brands expanded aggressively, and the company struggled under high valuations and weak investment climate.Another famous brand, Perfect Diary, also suffered.Its rise depended entirely on social media traffic — KOL/KOC, collaborations, celebrity endorsements.When traffic dividends faded,low user stickiness, low repurchase, weak brand power, and high marketing costs became fatal.From 2020 onward:4 years → losses totaling 5.8 billion yuan.and already two delisting warnings.Now it is trying to rebuild through R&D and skincare but whether it can survive depends on fate.Bless Huang Jinfeng.Severe Involution → Loss-Making CompetitionThe defining feature of the internet economy and overcapacity economy is involution.Burn money → burn competitors → survive → monopolize → raise prices → make profit.BAT, TMD, Huawei all fought their way to the top this way.

In most industries, the top three now hold 90% of the market.So expanding market share becomes survival.The most obvious involution today is in the new energy auto industry.The 2024 Politburo explicitly warned:Prevent harmful involution in competition.The chairman of the World New Automotive Technology Cooperation Ecosystem summarized six absurdities:Cost involution → cutting corners, fraud.Technology involution → deceiving partners, copying.Capital involution → late payments, using tokens.User involution → smoothing incidents, deception.Relationship involution → opportunistic alliances.Public opinion involution → misinformation, water armies.In this environment, profit margins fall:2021: 6.2%.2023: 5.0%.2024 Jan–Apr: 4.6%.Losses of new car companies:Leapmotor: –1.01B.Xpeng: –1.37B.NIO: –5.26B.Although several Chinese automakers made the Fortune Global 500,the total profit of all eight Chinese car companies is still less than any one of Volkswagen, Toyota, Stellantis, BMW, or Mercedes.China’s car industry is big but not strong.Since 2020, more than 20 major automakers have collapsed.It has been brutal.Final WordsThere is a saying in investment:“To be a qualified investor, you must lose at least 100 million.”Losing is part of growth.But you don’t have to eat all losses yourself.Learning from the failures of others is also wisdom.For enterprises, the path is clear:Hold firm, positive values.Be customer-centered.Focus on the main business.Do subtraction before addition.Build excellent products and services.Strengthen your moat.Only then can a company avoid the curse of:“Five years to rise, five years to get rich, five years to collapse.”