Reports > Steel

Shift in the Global Hidden Champion Paradigm: The Decline of Germany and Japan and the Rise of China

2025.12.24 Jae-ho Jung

While traditional hidden champions in Germany and Japan are declining due to delayed digital transformation and structural vulnerabilities, China is reshaping global manufacturing supremacy by nurturing over 15,000 "Little Giants" through its state-led Specialized, Refined, Unique and Innovative (SRUI) enterprise strategy. South Korea must respond by focusing on qualitative innovation, fostering Korea-Japan solidarity, and establishing strategic cooperation with China.

Executive Summary

  • • The "Hidden Champion" model, which backed the success stories of traditional manufacturing powerhouses Germany and Japan, is facing a severe crisis due to its structural limitations and delayed digital transformation.

  • • In contrast, China is fundamentally restructuring the global manufacturing landscape by driving the explosive growth of "Little Giant" enterprises through its unique nurturing policy known as Specialized, Refined, Differential, and Innovative (SRUI) Enterprises.

  • • This paradigm shift is transforming the core competitive dynamics of global supply chains, posing a direct threat and a critical challenge to South Korea, particularly in the materials, parts, and equipment sectors.