The future of specialized and sophisticated SMEs is promising, and the support of relevant policies and capital markets will be strengthened continuously.
Industrial software, intelligent factory
Specialized and sophisticated small and medium-sized enterprises (SMEs) listing process accelerated this year, accounted for more than 70% of the new shares. Increasing specialized and sophisticated SMEs have completed IPO, such as West Magnetic Technology (Chinese: 西磁科技), Goodwill Sail Technology (Chinese: 誉帆科技), and Jin Zeli (Chinese: 金则利) which will conduct IPO from 1 November to 3 November. This indicates the capital market's support for strategic scientific and technological innovation in line with national guidance, and also accelerates the early incubation of specialized and sophisticated SMEs, increasing the enthusiasm of venture capital.
Specialized and sophisticated SMEs have demonstrated the resilience and vitality of development, and have become the main force of IPO. According to iFinD statistics, as of the close of business on 30 October, there are 275 enterprises in the A-share debut listing since 2023, IPO fund-raising amounted to CNY 331.554 billion. Among them, 198 belong to the specialized and sophisticated SMEs, accounting for 72%; IPO fund-raising amounted to CNY 179.146 billion, accounting for 71%. The A-share market plays an active role in supporting the financing of specialized and sophisticated SMEs. As of the close of business on 30 October, the total number of A-share specialized and sophisticated SMEs reached 1,837, and the total IPO fund-raising amounted to CNY 1.26 trillion.
In terms of refinancing, the refinancing of listed specialized and sophisticated SMEs during the year, including additions, share placements and convertible bonds, totalled CNY 45.879 billion. From the point of view of the plate, the number of new shares of specialized and sophisticated SMEs on the GEM and KCB boards during the year was the highest, with 79 and 43 shares respectively, followed by the BSE and the Main Board, with 50 and 26 shares respectively. From the aspect of the industry, a larger proportion of manufacturing enterprises, a total of 148, accounting for more than 70%, involving special equipment manufacturing, general equipment manufacturing, instrumentation manufacturing, chemical raw materials and chemical products manufacturing, pharmaceutical manufacturing. Regarding the planned use of financing of the specialized and sophisticated SMEs during the year, it is mainly for the development of new products, new technology development, as well as production line new expansion, production line or workshop intelligent transformation.
In addition, listed specialized and sophisticated SMEs are technologically advanced, and innovation capability continues to grow. As of 30 October 2023, the number of patents of specialized and sophisticated SMEs totalled 234,200, including 166,900 invention patents, 39,600 utility model patents, 18,200 invention grants and 0.96 million design patents.
Policies to support the cultivation of specialized and sophisticated SMEs have introduced frequently in many provinces and municipalities since the beginning of 2023, involving credit preferences, tax exemptions and reductions, bonuses and rewards, and green channels. In July this year, the Ministry of Industry and Information Technology made a public announcement on the list of the fifth batch of specialized and sophisticated SMEs, which reflects strong "hard science and technology" attributes. The listed fifth batch of specialized and sophisticated SMEs focus on new materials, high-end equipment manufacturing and new generation of information technology, and it is expected that the Science and Technology Innovation Board and the Beijing Stock Exchange will provide greater support to the incubation of specialized and sophisticated SMEs in the future.
In addition, the regulator has made more efforts to support the development of specialized and sophisticated SMEs and strengthen the interconnection of multi-level capital markets. on September 1, the Securities and Futures Commission (SFC) formulated and released the "Opinions on the High-Quality Construction of the Beijing Stock Exchange" (known as the "19 Articles of Deep Reform" in the market), which depicts the blueprint for further advancing the stable development, reform and innovation of the Bejing Stock Exchange. On October 20, the National Stock Transfer Corporation (NSTC) signed regulatory cooperation memorandums with the first batch of 18 regional equity markets, marking the official landing of the three or four boards system-based docking mechanism.
According to the Interim Measures for the Administration of Gradient Cultivation of High-Quality Small and Medium-Sized Enterprises, specialized and sophisticated SMEs can be divided into three levels: innovative SMEs, specialized and sophisticated SMEs, and specialized and sophisticated "small giant" enterprises. Data illustrate that in the first three quarters, China has cultivated 103,000 specialized and sophisticated SMEs, 12,000 specialized and sophisticated "small giants" enterprises, and 200 SMEs special industrial clusters, which play an important role in strengthening and replenishing the chain.
Regarding the challenges that specialized and sophisticated SMEs may face in the future, Tian Lihui, president of Nankai University's Financial Development Research Institute, pointed out that the obstacles that may exist in the process of financing through the capital market are the high technological barriers, the low credit reputation, the difficulty of enterprise valuation and the expensive cost of financing. Cheng Fengzhao, member of the Academic Advisory Committee of China Listed Companies Association and president of Zhongguancun Guo Rui Financial and Industrial Development Research Association, said that due to their business characteristics and market positioning, some of the specialized and sophisticated SMEs are facing challenges such as market risks and technological risks, which may lead to differences in the capital market's valuation. Market participants suggested that in order to further attract institutional investors to pay attention to and invest in specialized and sophisticated SMEs, it is necessary to focus on promoting the capital market to compile specialized and sophisticated related indexes in the future, on the basis of which to support the market to issue related ETF funds and other derivative products.