2012.08.08 CoStone Capital Views:
After six years since the establishment of the NEEQ, only six companies succeeded in transferring to the SMEs board and STAR board, because they were fully qualified to go public. “The direct beneficiaries of this expansion are the brokers instead of SMEs, VCs and PEs. Brokers will thus gain enormous extra revenues except for underwriting and recommends.” said Han Zaiwu.
CoStone Capital Han Zaiwu: NEEQ-Listed Companies Are Hard to Be Huge
Some research agencies believe that the innovation-driven SMEs are expected to obtain rapid growth due to the NEEQ (the National Equities Exchange and Quotations), opening up a new battle field for the exits of VCs and PEs. However, VCs and PEs in Shenzhen think little of the expansion of the NEEQ. Few of them has prepared for it.
According to Han Zaiwu, partner of CoStone Capital, there are three reasons behind the indifference:
First, limited financing potential. The private placement note of the NEEQ is still limited after the expansion.
Second, the underrated equity value of the NEEQ-listed companies. The liquidity of the listed companies of Zhonguancun Science Park is thin in the secondary market, with an averaged turnover rate of 2.93%.
Third, the ambiguous functions of the transfer mechanism. The review and supervision of transfers are yet to be tested. The Green Channel of transfers is hard to initiate in the short run. Insufficient market participation and immature investors make the listed companies harder to be huge.
After six years since the establishment of the NEEQ, only six companies succeeded in transferring to the SMEs board and STAR board, because they were fully qualified to go public. “The direct beneficiaries of this expansion are the brokers instead of SMEs, VCs and PEs. Brokers will thus gain enormous extra revenues except for underwriting and recommends.” said Han Zaiwu.
Above: Excerpt of the interview with Han Zaiwu from Shenzhen News. Please refer to this link to view the interview in full: http://stonevc.com/news_view.aspx?TypeId=5&Id=537&Fid=t2:5:2
Rewritten by: Luo Xinying, Edited by: Du Zhixin, Wei Yiyi
The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
