CHINA will soon open its own Nasdaq-like growth board, providing a boon to Chinese start-up companies.
Getting finance used to be a big headache for Chinese start-up companies.
But the difficulties will soon ease with the expected debut of a Nasdaq-like growth board this year.
The China Securities Regulatory Commission's chairman Shang Fulin said China's growth board would help establish a multi-layer capital market.
Small- and medium-sized companies have been anticipating the establishment of such a board for some time, and are expected to be delighted by the development.
Back in 2000 when the Shenzhen Stock Exchange applied to establish the Small- and Medium-sized Enterprise Board to facilitate the growth of start-up companies, people expected a platform similar to the Nasdaq which connected bright but money-tight companies with investors who wanted to make a bet.
However, when the Shenzhen board started in 2004, the threshold to get listed was not as low as expected.
It required a company to be profitable for three consecutive years, generate at least 30 million yuan (US$4.1 million) in collective earnings during the three years and have cumulative revenue during that period of 300 million yuan - almost the same criteria as the one for the main board.
"It is not what people expected," said Zhang Qi, an analyst with Haitong Securities Co.
"The board does not fill the role as a platform to assist start-up companies."
Zhang said the reasons behind the Shenzhen board's threshold requirements included the bad performance of high-tech companies in those days and the failures of a few boards of a similar nature in foreign markets.
But the impact at the time of restricting easy access to finance meant some companies shifted to the main board for funds, some struggled to survive, some went to the illegal underground banks and some others simply disappeared.