Study On Growth Enterprise Market And Its Effect On Chinese Economy

Growth Enterprise Market (GEM) is designed to offer growth and technology enterprises an avenue to raise capital and provide an exit ground for venture capitalist. Compared to the main board and small and medium enterprise board, GEM of China is set especially to offer direct avenue for innovative enterprises to raise capital. Therefore, GEM has much stricter requirements on exit mechanism, supervision system, information disclosure system, and investor admission system.GEM was generated approximately fifty years ago and has up or down development experience in different countries. Since 1991, a lot of countries have launched their GEM while other countries closed their own. GEM not only reflects high risk of the market but also reflects that the requirement on industry innovation is increasing and more and more countries attached more attention to the development of their small and medium enterprise. Among the existing GEM, there are high end markets with high raised capital, big quantity of listed companies, high market value and high fluidity, such as NASDAQ, AIM and KOSDAQ. There are also low end markets such as South Africa's GEM, Malaysia's MESDAQ, and Thailand's MAI. And the rests are medium range of markets with medium position and unclear prospects. The paper briefly introduces the stock market of Hong Kong, Singapore, South Korea, USA, and London and their GEM, and comparatively analyses the listing criteria, listing costs, operation models and transaction regulation of the GEM in different countries.NASDAQ in USA is the most successful GEM in the world and plays an important role in USA's economy and innovation. Firstly, NASDAQ offers smaller and medium companies a direct avenue to raise capital. Secondly, smaller and medium companies can achieve sustainable development with innovation of technology and products by refinancing in second board. Thirdly, NASDAQ has become an integral part of the portfolio of markets of USA. Fourthly, NASDAQ encourages employee commitment by helping the listed companies to make share schemes more attractive. Another successful GEM is KOSDAQ of South Korea, which has made much contribution to the economic development of the country. KOSDAQ fosters the development of venture capital investments, and provides a financial platform for the growing and technology enterprises. What's more, KOSDAQ provides more job opportunities and business start-up opportunities.After a decade's preparation, Chinese GEM has been launched on September 25, 2009, when the first batch of companies successfully listed in GEM. The GEM of China is an indispensable part of Chinese capital market and it will play an important role in the development of Chinese economy.GEM of China has the following significance: firstly, it promotes the technology innovation of China; secondly, it is becoming the cradle of high technology enterprises; thirdly, it offers small and medium enterprises an avenue to raise capital; fourthly, it provides both an exit ground and a venue for further fund raising for investment made by venture capitalists; fifthly, it is an important step to establish a multilevel capital market system in China; finally, it fosters the business start-up system and decrease the pressure of employment.The market position of GEM in China is to provide an avenue for innovative enterprises while innovation is a key strategy of Chinese economic development. Nowadays to promote innovation strategy and economic structure change has become the new requirement of sustainable development of Chinese economy. GEM of China helps connect China's innovation-oriented companies with the country's innovation growth strategy and will definitely bring influences to China's innovation economy.From overseas experience, we can find some common ground of the successful cases: firstly, investor care is the top priority of business philosophy; secondly, choose an operation model suitable for the country's situation; thirdly, set an entry criteria suitable for the small and medium enterprises; fourthly, set much stricter approval and supervision system; fifthly, keep changing and adjusting by situation; sixthly, grow in the support and encourage of government, etc. On the other hand, we can still find the reasons on those unsuccessful cases: firstly, the influence of overall economic environment; secondly, the industry of GEM is limit and the distribution of the resource is too focused which would undermine the GEM market as a whole anti-risk ability; thirdly, the listing requirement criteria are too low and the regulatory approval is not strict.On the basis of successful overseas cases,absorbing the failure lessons, and combining with the situation of China, this paper puts forward some policy advices for GEM of China, including: Firstly, on the basis of Chinese situation, set loose entry criteria and convenient listing process for GEM. Secondly, set strict listing approval system, supervision system and information disclosure system. Thirdly, clearly position on the industry of listing companies, not confined to one or two industry. Fourthly, position clearly on the global market. Fifthly, introduce sponsor system. Sixthly, set strict delisting system. Seventhly, adopt suitable operation model per Chinese actual economic situation. Eighthly, adopt independent director system to protect the interests of small and middle shareholders.Chinese GEM has just started. With the constantly development of Chinese economy and the push of innovation strategy in China, Chinese GEM is facing a good opportunity to make great progress. On the other hand, GEM can develop well only by means of constantly adjustment and innovation. Chinese GEM can play an important role on the economic development only by learning other countries'experience and lessons.