Shanghai Stock Exchange Initiates Mentor System For Growth Of MSMEs

06/07/2012

The Shanghai Stock Exchange (SSE) has launched a program of serving micro, small and medium-sized enterprises (MSMEs).

The SSE held a symposium on corporate governance of private enterprises and services for MSMEs yesterday. At the symposium, SSE President Zhang Yujun said that the SSE had recently formulated the "SSE Outline of Services for Micro, Small and Medium-sized Enterprises" based on a wide-ranging survey for the purpose of giving play to its advantages and taking effective measures to serve the real economy and the development of MSMEs.

According to the outline, the SSE establishes a mentor system for the growth of MSMEs. It sets up a mentor group comprised of the selected entrepreneurs with social influences and senses of social responsibility from listed companies, which provides MSMEs with consultation services for technologies, systems and management as well as personnel training and other services. Thus, a platform for the communication between listed companies and MSMEs takes shape.

It is innovative for the SSE to establish the mentor system.

According to sources, the SSE initiatively selected Chairmen or Presidents from 32 private listed companies to serve as mentors for the growth of MSMEs. At the symposium yesterday, the SSE held a ceremony for the appointment of 32 mentors.

Relying on the mentor group, the SSE will build a team of experts and hold lectures, forums and other activities to offer startups consulting, legal aid and other training services for MSMEs. Besides, it will launch the program of one-to-one support from mentors to MSMEs.

As stated in the outline, the SSE will work out some measures to elevate the proportion of direct financing for MSMEs.

To be specific, the SSE will simplify the procedures for approval of MSMEs' direct financing and elevate the proportion of direct financing for them. Secondly, it will give support to MSMEs for their issuance of private placement bonds. Thirdly, it will guide the venture capital investments and private equity funds for the investment in MSMEs. Fourthly, it will coordinate with relevant authorities to promote the construction of an over-the-counter market with unified regulation and provide micro and small enterprises not meeting the listing requirements with the services of resource distribution in the capital market. Fifthly, it will join hands with all related parties for propelling MSMEs to implement the shareholding reform and finance in the capital market.

Meanwhile, the SSE plans to improve the special section for pre-IPO enterprises on the external website. Besides, it will set up a special section for MSMEs, in which relevant contents in line with the characteristics of MSMEs will be increased to satisfy MSMEs' demands for more information about financing channels in the capital market. Furthermore, the SSE will make more efforts on the survey on MSMEs, regularly release relevant research reports, timely analyze the development trend of MSMEs, and continuously improve the pertinence and effectiveness of measures for solving the financing problems of MSMEs.

Zhang Yujun pointed out that serving MSMEs was of great importance to the development of the SSE's markets.

At present, the SSE has established a multi-tiered blue chip market system centered with blue chip shares in promising, rising and typical companies. As the Chinese economy is at the critical stage of structural adjustment, development mode transition and steady growth, the SSE is confronted with an important task about how to better support the development of the real economy. Having devoted itself to pushing forward the transition and listing of large state-owned enterprises in the decade before 2010, the SSE now faces a most important task, that is, to further promote listed companies' restructuring, improve their quality, advance the diversification of their structures and encourage small and medium-sized enterprises, rising enterprises and enterprises in the industries with products in short supply, the industries related to the people's livelihood, the cultural and creative industry, the education and media industry, the agricultural and food industry and the modern service industry for listing on the SSE. The SSE will offer services for both traditional large and medium-sized enterprises and MSMEs, and encourage more small and medium-sized enterprises to enter the SSE markets.

Zhang said that it was a try and innovation for the SSE to set up the mentor system for the growth of MSMEs based on the actual conditions of the Chinese capital market to better serve MSMEs.

Small and medium-sized enterprises play a prominent role in the Chinese economic development and transition. Therefore, it is of strategic significance to boost the growth of small and medium-sized enterprises for the sound and sustainable development of the national economy.

Data shows that there are over ten million small and medium-sized enterprises in China, accounting for 99% of all the Chinese enterprises. Their contributions to tax revenue, GDP, national self-independent innovation and employment account for 50%, 60%, 70% and 80% of the total respectively, which indicates their crucial role in the national economy. In April 2012, the State Council issued the opinions on further supporting the sound development of MSMEs in particular. The China Securities Regulatory Commission (CSRC) also took it as a strategic move to serve MSMEs for better supporting the national economic development, which worked together with relevant national authorities to successively issue many measures for the development of MSMEs.

For example, the private placement of bonds for SMEs recently is an important move for the SSE to serve MSMEs.

According to Zhang, the SMEs private placement bonds go on well on the SSE up to now. As of July 4, the SSE has accepted the filing applications of 25 MSMEs for private placement bonds and approved the filing of 21 MSMEs for the bond issuance. A total of 11 enterprises have issued the private placement bonds while another one is supplementing materials, one being examined and two refused. These MSMEs cover Beijing, Tianjin, Shanghai, Zhejiang, Jiangsu and Hubei, with the total amount for filing up to RMB1,935 million. Among 21 enterprises whose issuance were approved, 11 enterprises are high-tech ones.

At the end, Zhang emphasized that the SSE, as an organizer of the markets, would follow the established scheme and provide MSMEs with good platforms for financing and information services in terms of the stock market, the bond market and the corporate governance. Moreover, it will renew its efforts to mobilize the market participants, including relevant authorities of local governments and intermediaries, to provide MSMEs with good services for their restructuring, financing and management.

As said by SSE Vice President Huang Hongyuan at the symposium yesterday, the SSE had paid attention to private enterprises especially MSMEs which encountered increasing cost, heavy taxes and difficulty in financing with the influence of the complicated and changeable economic situation at home and abroad.

To support the growth of MSMEs and help them with reinforced rationalization is an objective requirement for establishing and improving the SSE multi-tiered blue chip market. It is a move by the SSE to establish the mentor system for the growth of MSMEs based on a wide-ranging survey in a bid to expand the coverage of the SSE capital market to MSMEs and better serve the real economy.

Actually, some listed companies take the initiative to help MSMEs, some of which have benefited a lot. At the symposium held yesterday, Board Chairman Chen Qiyu of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. mentioned Fosun's ways of supporting MSMEs as follows. Firstly, Fosun establishes business relationships with MSMEs. Secondly, Fosun directly establishes MSMEs. Thirdly, Fosun develops those similar to the Private Equity business. Fosun summarized that the supports provided by large enterprises for MSMEs could not only lower their financing costs and elevate their competitive forces, but also improve their corporate governance and enhance their capabilities in risk control and other aspects.

After highly acknowledging the SSE's assistance to MSMEs, the private enterprises present at the symposium expressed that the sound development of MSMEs is of great significance to the long-term growth of the Chinese economy and the Chinese capital market. Board Chairman Zheng Yonggang of Shanshan Investment Holding Co., Ltd. said that as the experience of large enterprises is helpful for startup-oriented MSMEs, the large enterprises should take on the responsibility of boosting the development of these MSMEs. Board Chairman Zhang Hongwei of Orient Group Incorporation, in addition to expecting the SSE's launch of specific measures, suggested that efforts should be made to support MSMEs in light of different industry chains, rather than arrange "marriages" for large enterprises and MSMEs.