GUANGZHOU: The city will formulate preferential policies to support IPO initiatives by its private sector enterprises.

At a seminar organized by the People's Political Consultative Conference of Guangzhou earlier this week, Guangzhou Vice-Mayor Cao Jianliao said that the municipal government will set up a small and medium-sized enterprise (SME) bureau to manage affairs related to such businesses and will take measures to lay out favorable policies to help private sector enterprises be listed.

About 40 private-sector enterprises, almost all of which are small and medium-sized, will receive priority treatment in the next few years, with about 15 to 20 more expected to be listed in the next three years, Cao said.

"Private enterprises are increasingly contributing to the city's economic development. However, the number of listed companies among them is too small," he noted. "The city's strategy to support promising private-sector enterprises to be listed will make it easier for them to raise funds for further business expansion."

The vice-mayor said that the city government will also improve the credit warranty system for private sector enterprises, setting up facilities offering warranty services for credit worth 1 billion yuan and capable of offering such services to 100 enterprises.

Official statistics indicate that the city has 131,456 private enterprises and 314,280 self-employed businesses.

The private sector realized industrial output value of 210.2 billion yuan, making up 35 percent of the city's total last year.

Of the city's some 900 high-tech enterprises, 90 percent belong to the private sector.

According to Zhang Shuhua, assistant researcher of the Guangzhou Economic Research Institute, fund-raising difficulties have long been a stumbling block on the road to development for Guangzhou's private economy.

"The IPO plan will be an effective way to solve the problem and accelerate the expansion of successful private sector enterprises," she said.

Citing the outcome of a recent survey involving over 1,000 private sector enterprises in the Pearl River Delta region, Zhang said that more than half of them consider capital shortage the biggest hurdle in their business operations and about 70 percent of them find it difficult to borrow money from commercial banks.

As for hi-tech private enterprises in Guangzhou, Zhang said that 70.6 percent of them rely on their own wealth for their firms' capital inputs, while 23.5 percent rely on loan credit from commercial banks, and only 5.9 percent have access to venture capitals or have been listed.

(China Daily 09/15/2007 page13)