Drying equipment when GEM is in progress
With the GEM (Growth Enterprise Market) process gaining momentum, Shandong, a key province for listed resources, has been actively engaging in preparations. According to Li Yongjian, deputy director of the Shandong Provincial Development and Reform Commission, the province is currently examining the listing of GEM stocks within its eight high-tech parks. Following the release of the draft IPO guidelines, several companies in Shandong have shown interest. In response, reporters have conducted interviews with various enterprises, highlighting their main concerns.
One of the major points raised by companies is the need for the GEM to continue encouraging innovation. Chai Bingyin, general manager of Shandong Tianli Drying Equipment Co., Ltd., believes that serving high-growth, innovative SMEs should be the core of the GEM. However, he expressed concern that the draft removed specific recognition and support for high-tech companies, which left him confused. Similarly, an executive from Weihai Fishery Science and Technology Development Co., Ltd., who has long aimed to list on the GEM, emphasized that the market should still reflect certain advantages for high-tech firms. He argued that emphasizing innovation and protecting shareholder rights are not mutually exclusive. For instance, the Torch Program’s criteria include not only national needs but also technological content and industrialization potential. He added that truly innovative products are often unrecognized at first, and professional evaluations help ensure their market viability and social impact. If a product is obvious to everyone, companies can seek funding through other channels rather than the GEM.
Another issue under discussion is the regulatory framework. While the draft introduces stricter measures compared to the main board, some companies feel the 80% profit forecast threshold is too rigid. Many believe that if a company meets this standard, it implies low risk, which could undermine the GEM's unique value. This, they argue, may make the GEM less attractive compared to other financing options.
Additionally, intermediaries remain a challenge. Although the financial requirements for GEM listings are considered reasonable, some companies face difficulties due to the three-year operational period requirement. Gao Dezong, president of Qingdao Liangyou Catering Co., Ltd., noted that his company, though less than three years old, exceeds the GEM’s financial thresholds. He hopes the GEM would be more flexible in this regard. Meanwhile, Hao Zhibo, deputy manager of Shandong Chu Group, pointed out that simply lowering the threshold isn’t enough. His subsidiary previously listed on the GEM, but the sponsor system remains a bottleneck. With limited sponsors and high demand, many companies struggle to find suitable ones. Even with no cap on recommended projects, the quality of advisory services is often lacking. To foster a multi-tiered capital market, comprehensive institutional coordination is essential.
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