TOKYO -- Chinese companies dominated the rankings of the fastest growing technology companies in the Asia-Pacific region, taking seven of the top 10 spots in 2018, according to a survey by management consultancy Deloitte. India was close behind.
Deloitte's annual "Technology Fast 500 Asia Pacific Ranking" rates publicly traded and privately held tech companies headquartered in the region by fiscal year revenue growth from 2015 to 2017, or 2016 to 2018 for a financial year ending between January and June. Chinese companies are increasingly dominant, accounting for nearly 30% of the 500 companies on the list, up from 23% in 2017.
"We are witnessing a rapid transition from legacy business models to online platforms among B2B ecosystems, and China is at the forefront of this growth," said Toshifumi Kusunoki, the report's principal author, in a statement.
The top spot went to Ke.com Technology, an online real estate brokerage that offers new, secondhand and rental properties in about 500 cities across China, using technologies such as virtual reality to allow customers to browse. The Chinese unicorn -- as privately held companies valued at $1 billion or more are called -- is owned by one of the country's largest real estate companies, Homelink Real Estate Agency, also known as Lianjia. Ke.com's revenue grew an astounding 32,179% over the two years.
Guangzhou Hui Zheng Zhi United Technology was second on the list. The operator of the B2B platform offers services for the chemical industry ranging from consulting and interactive marketing to sourcing of materials and logistics. The company saw revenue growth of 24,702%.
China had 149 companies among the top 500 and seven out of the top 10. The top five companies in this year's ranking were all Chinese.
However, the composition of the top 10 has changed drastically. In 2017, Wuhan Douyu Network Technology took first place. The company, backed by Tencent Holdings, is a livestreaming games platform. Another gaming company, developer Guangzhou Fengei Network Technology, ranked third.
Deloitte's Kusunoki said 2018 saw "an interesting and diverse selection of B2B e-commerce, including real estate, chemicals, textiles, industrial supplies and fintech companies."
China's tech industry has rocketed to prominence in the last several years. Five years ago there were no Chinese companies in the top 10 of the Deloitte ranking. "Various transformations have overlapped in China, which rapidly boosted technological advances," said Kenji Yoshikawa, a senior economist at Mizuho Securities.
One of the biggest changes was the Made in China 2025 plan unveiled by President Xi Jinping in 2015, which seeks to incorporate advanced technologies into the country's industry to help Chinese companies compete with their Western counterparts. Fields such as information technology and clean-energy cars have received heavy government subsidies under the program.
Advances in mobile communications have also given Chinese tech companies a lift. "4G wireless networks have spread quickly," said Yoshikawa, adding, "Infrastructure development also helped road traffic [flow], which supported the spread of e-commerce."
Two Indian companies also made it into the top 10. All told, the country had 61 businesses on the full list, or about 12% of the total.
In sixth place was Mogli Labs, better known as Moglix, with two-year revenue growth of 11,836%. The B2B e-commerce company is a marketplace for industrial tools and equipment. It is funded by investors such as Tata Group Chairman Ratan Tata.
Indian startups are increasingly attractive to global investors, thanks to the country's strong population and growth and steady economic expansion. This is encouraging them to bet on a wave of digital and other technologies transforming India. Another factor is growing concern among overseas investors about intellectual property theft in China, which has become a focal point of its trade conflict with the U.S.
An institutional investor in Tokyo who operates an investment fund focused on ASEAN companies typifies the interest in India, saying, "India has a booming consumer market and is moving toward becoming a cashless economy at a fast pace. There are a lot of startups that have great potential to grow."
Razorpay Software, seventh in the ranking, with a two-year growth rate of 11,174%, handles online payments for more than 100,000 businesses and is a leading fintech company in India. It offers digital payments for consumers, giving them a simple way to make cashless transactions.
NumberMall, 93rd on the list, with revenue growth of 881%, has developed an app that provides payment services for small merchants in India. The startup has teamed up with one of the country's largest payments company, TechProcess, helping to bring cashless transactions to mom and pop stores. The company hopes to bridge the gap in digitization between rural and urban areas in India.
"Indians who have studied at prominent foreign universities have been flowing back to their homeland, and have found success by building their own businesses," said Toru Nishihama, chief economist at Dai-ichi Life Research Institute.
Manak Waste Management co-founder Nakul Kumar holds a master's degree in European business and international management from the ESCP Europe Business School and has worked in marketing at Amadeus (France), a travel services company. Manak, which placed 13th in the ranking with a growth rate of 6,853%, runs Cashify, an online platform for buying and selling used electronic equipment.
Sachin Jain, co-founder and CEO of Oriano Clean Energy, is another up-and coming Indian entrepreneur who was educated abroad. He has a Master of Business Administration from the University of Cambridge and a Master of Science from Ohio University in the U.S. He worked as an associate director at consultancy KPMG before setting up Oriano, which specializes in the design and installation of solar power plants. The company was 29th on the list, with revenue growth of 3,431%.
Although it had no startups in the top 10, Taiwan had 91 companies on the list, or 18% of the total. Considering the size of their economies, Japan and South Korea had few young and dynamic tech startups, making up 8.2% and 8.8% of the total, respectively. While Taiwan has been a center of electronics and hardware manufacturing, compared with its neighbors, it is still in the early stages of cultivating tech companies. Japan also struggles with innovation in some areas, suffering from a lack of software engineering talent, for example.
The highest ranked company from Taiwan, eCloudvalley Digital Technology, was 33rd on the list with a growth rate of 3,007%. It offers business clients cloud technology support. The top Japanese ranked company was airCloset, a fixed-rate clothing rental service. The company placed 15th on the list, with revenue growth of 6,048%.
Competition among tech companies is likely to heat up even more. This year is expected to see the start of the fifth-generation wireless technology era, with companies planning to introduce new products using new wireless networks that will enable broadband-like speeds for mobile devices.
In early December, the Chinese government announced the accelerated rollout of 5G technology at the Central Economic Work Conference. Beijing's financial support will allow "Chinese tech companies to have certain advantages regarding funding in research and development," said Hirokazu Hiratsuka, head of research at Mizuho Research Institute's Asia and China unit.
However, "with China undergoing global scrutiny over the issue of intellectual property rights, companies will be pressured to comply with international rules," said Hiratsuka. "That could lead to lower rates of growth."