Under the restriction of double disadvantage context, local small and medium-sized suppliers can still quickly form hidden-champion enterprises in global value chains (GVCs), which has gained wide attention from academia and industry. However, there are few in-depth interpretations in the literature. Taking 3 Chinese hidden-champion enterprises as the research object, this paper analyzes the formation process and key factors of hidden-champion enterprises in GVCs, and builds a theoretical model of the formation process of hidden-champion enterprises in GVCs.

The results show that: (1) Relationship-embedded depth is a key factor for hidden-champion enterprises to quickly gain sustainable competitive advantages in the specific manufacturing link of GVCs. (2) Niche-market breadth is a key factor for hidden-champion enterprises to quickly gain market leadership in the niche market. (3) The circular development mechanism of relationship-embedded depth and niche-market breadth provides sustainable power for the rapid formation and upgrading of hidden-champion enterprises in GVCs. Moreover, the unique local situational characteristics are the fundamental reasons for the emergence and smooth implementation of relationship-embedded depth and niche-market breadth.

The contributions of this paper are as follows: (1) It explores the formation process of hidden-champion enterprises in GVCs under the restriction of double disadvantage context, making up the theoretical gap in the dynamics of hidden-champion enterprises. (2) It reveals the role of global-leading enterprises and hidden-champion enterprises on the GVC governance structure, and the dynamic nature and high complexity of GVC governance, deepening the relevant theories of GVC governance. (3) It reveals the rapid formation and upgrading path of hidden-champion enterprises in GVCs, providing a useful reference for future exploration of more complex upgrading trajectories of enterprises in emerging countries. The conclusions also provide important enlightenment for other small and medium-sized suppliers in China to get rid of the low-end locking dilemma, and quickly form hidden-champion enterprises with strong competitive advantages in GVCs.