What changed
At a Beijing conference on October 12, German management scholar Hermann Simon laid out three conditions for Chinese private small and medium-sized firms hoping to become “hidden champions”: the ambition to be best, a sharp focus on a niche market, and global operations.
Simon also said his earlier global pricing research found 59% of companies trapped in a price-war “prisoner’s dilemma.” Hidden champions, he argued, escape that trap by offering greater value and charging roughly 10%, 15% more than the market average.
Why it matters
The message is blunt: growth alone is not a strategy. A smaller company does not need to win the whole market. It needs to become unusually difficult to replace in one carefully chosen corner of it.
That means competing through expertise, branding and service, rather than selling interchangeable goods and cutting prices until profits disappear. Simon described profit as a company’s basic cost of survival, making price wars more than an unpleasant feature of competition: they can undermine the business itself.
China’s large market, manufacturing efficiency, accumulated expertise and close access to customers give its firms a strong testing ground, Simon said. But the harder discipline is staying focused when a tempting new industry appears. His argument is that a narrow domestic niche can become large enough when paired with global markets.
He pointed to expanding supply chains around data centres and chip factories, along with life sciences, healthcare and care-focused robotics, as areas worth watching. The broader opportunity depends on whether firms can turn those sectors into durable, specialised capabilities rather than another rush into crowded markets.
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