(CBN - Global) April 13 -- China has at least 47 high-tech companies with a valuation of USD1 billion or more, including a large number of companies with artificially high valuations, said Mr. David Wei, former CEO of Alibaba Group Holding Ltd. [NYSE:BABA].
The bubbles of several of these unicorn companies were burst last year. Eading Group Co., an Internet giant once cited as a successful business example in the MBA coursework of a Chinese business school, declared bankruptcy on December 4 last year, with hundreds of stores closed nationwide.
The term unicorn refers to start-ups valued at USD1 billion or more that eventually go bankrupt or are forced into mergers.
As companies seek to expand quickly and double their valuations, founding investors no longer pursue efficiency but blindly engage in outbound mergers and acquisitions.
China has the largest share of global cross-border M&As, according to data from financial data provider Dealogic.