For Chinese enterprises, Chinese mainland's capital market is the first choice for listing. However, the Company Law has a number of provisions on the listing of Chinese enterprises, including:

(1) The total share capital of the company reaches 50 million shares, and the part that is publicly circulated is not less than 25%;

(2) The company has been profitable in the last 3 consecutive years;

(3) The company has a business record of more than 3 years;

(4) The share of the company's intangible assets in the total assets shall not exceed 20%.

When China's "Company Law" was formulated, the provisions on the listing of enterprises were aimed at large state-owned enterprises, so the requirements were relatively strict. However, with the restructuring of state-owned enterprises and the transformation and development of the economy, small and medium-sized enterprises and private enterprises have shown unprecedented vitality and become the backbone of economic growth. These companies have created a need to go public in the process of development, but in the face of the strict regulations of the Company Law, they have to abandon their local capital markets and turn their attention to the Hong Kong market and other overseas markets.

In order to change this situation, in 2000, the China Securities Regulatory Commission (CSRC) passed the "ChiNext Market Rules" (GEM Draft), which greatly lowered the threshold for small and medium-sized enterprises to list in China, and brought hope for small and medium-sized enterprises to list in China. On June 25, 2004, the Shenzhen Stock Exchange officially launched the SME sector, attracting more than 2,500 enterprises to queue up to apply for listing in a very short period of time. Although these measures have lowered the threshold for SMEs to list in China to a certain extent, the threshold for listing on the SME Board is still very high compared to listing on the Main Board, and enterprises still need to undergo strict review.

◆ Advantages of listing in Chinese mainland

The main reason why Chinese companies will consider the local market as the first choice for listing is that local listing can bring the following benefits to the company.

(1) Enterprises do not need to face differences in language, regulation, law and other aspects when listed in China, and can enjoy the advantages of time, place, and people.

(2) Compared with overseas listing, enterprises can gain higher recognition when listed in China. Because the company is listed in the local market, it can be known by more investors and recognized by investors.

◆Limitations of listing in Chinese mainland

(1) Lengthy review process.

According to the provisions of the Company Law, companies listed in China are subject to audit. First, companies that are willing to go public submit listing applications to the CSRC; Secondly, the China Securities Regulatory Commission will review the listing qualifications of enterprises, and eligible enterprises will be approved for listing. Due to the large number of companies applying for listing each year, the number of companies approved by the CSRC for listing each year is limited, resulting in a long waiting period for most companies. Even if the newly opened SME board, although it has lowered the listing threshold for SMEs to a certain extent, it still needs to review the enterprise, and the review time is also relatively long. According to statistics, there are less than 100 companies listed in China every year, while about 400 companies have passed the CSRC's review and are waiting for listing, and many more companies are submitting listing applications to the CSRC.

(2) The threshold for listing is high.

The Company Law has strict requirements for listing, especially on share capital, which many small and medium-sized enterprises cannot meet. In the newly launched SME sector, the listing threshold has not been lowered much, which has largely hindered the pace of SME listing.

(3) The listing fee is higher.

Many companies believe that the cost of listing in China should be relatively low, but this is not the case. According to statistics, the average upfront cost of a company listing in China is 15 million yuan, which is almost the same as the cost of listing in Hong Kong, China and overseas.

◆Suitable for enterprises listed in Chinese mainland

Through the analysis of the conditions, advantages and disadvantages of enterprises listing in Chinese mainland, it can be found that local listing is mainly suitable for large enterprises, and the needs of enterprises for development funds are not urgent, and they can accept long-term review and waiting. As for the SME board launched by the main board, if SMEs can accept a long queue for review, they can give priority to listing in Chinese mainland.