Hidden Champions: Unknown Global Market Leaders

Abstract

The hidden champions are highly specialized market leaders (the top three nationally) that have a low level of public awareness and revenues of less than $5 billion (USD). They are driven by long-term growth and continuous innovation to add value for existing loyal customers in niche markets. Our empirical research reveals five distinguishing features of the hidden champions: • Rapid growth from divergent roots: Within less than three decades, these Chinese companies made their way from being domestic emerging players to outcompeting international suppliers and becoming global niche market leaders. Their roots lay in transformed state-owned enterprises but also grassroots new ventures. • Strong R&D capability: The hidden champions have quickly developed strong R&D capabilities in their niche segments. They have done this by hiring more R&D employees, increasing investment in R&D, and making R&D their strategic priority. • Continuous product innovation: The hidden champions excel at continuous product innovation. Innovation's sole purpose is to add more value for customers and lower the cost of production, increasing margin and loyalty rather than price. • Leveraging the advantage of being hidden: Chinese hidden champions try to stay out of the spotlight and shield themselves from competition and the entry of newcomers. In this way, their product life cycles can be extended, influence from outside can be limited, and time can be spent on managing and independent decision making. • Global innovators: Considering their narrow business customer market focus, these companies need to cross geographic boundaries in order to grow. These companies can be considered early globalizers, especially considering their age.