They need capital to grow. While bank loans can certainly help here, what would be more efficient is if they could access the stockmarkets. Currently, many local governments have venture capital funds to seed such companies. As a result, in Shenzhen and elsewhere with such venture funds, there are incubator industrial complexes designed to assist budding entrepreneurs. These efforts have produced a host of potential candidates for the stockmarkets.
T here are now two points of access to China's domestic stockmarkets.
Large companies also can get a backdoor listing by taking a controlling interest in a listed company. Indeed, a new set of takeover regulations, stressing transparency but making takeovers less costly, will soon be released for debate. The problem is that start-up companies can't take advantage of these two points of access to the stockmarkets. However, they may apply to list on Hong Kong's Growth Enterprise Market, which doesn't require a three-year profit record. But here, the mainland's companies law creates difficulties.