It's time for Internet companies to return to a shares to eliminate embarrassment

GEM is an innovative growth-oriented small and medium-sized enterprises of the fittest "big smelting Furnace", is "good business incubator." In the U.S. Nasdaq market, for example, hundreds of small and medium-sized enterprises have come to this listing, preference for risk investors to invest a lot of capital. Through the market of the fittest, some corporate earnings downturn or even losses, and eventually exit the market, but also a lot of enterprises have made great success, grow into a well-known large companies.

In all kinds of enterprises, the Internet company innovation, growth characteristics of the performance is particularly obvious, can be said to be the most need to get the market funds to support one of the types of enterprises, at the same time, internet companies are also the most consistent with the concept of venture capital. But the reality lets a person have a little embarrassment and regret, our country gem market since 2009 set up, has been difficult to find the trail of Internet company. At the same time, China's large number of high-quality Internet companies in the last more than 10 years have taken the VIE structure to the United States and other overseas markets, and the domestic capital market is basically insulated. There are two reasons: First, 2009 before the domestic market has not yet opened the gem, and the motherboard, SME board listing threshold is higher, the Internet enterprises generally do not reach the domestic listing requirements, even if 2009 years later opened the gem market, but the threshold for the Internet companies are still too high. Domestic Internet companies desperately need additional capital to expand their businesses, and they seek support from overseas capital markets. Second, the direct listing in the United States is not realistic, because the SFC set a higher threshold for overseas listing, the domestic Internet enterprises are difficult to meet the requirements, even if the Internet companies can reach the relevant threshold, but the "foreign investment industry Guidance catalogue" prohibited foreign access in the field of industry including the internet industry, Therefore, internet companies can not directly in the overseas market listing financing.

Therefore, the domestic Internet enterprises using VIE is the Agreement control mode, to achieve in the Nasdaq, NYSE and other markets in the indirect listing. On the surface, the VIE does not involve the foreign capital to the domestic enterprise's shareholding control, from the form to comply with our country restricts the foreign capital entry the related stipulation, but in fact, under the VIE structure foreign capital to the domestic enterprise does not have the ownership control the name, has the stock right control, the foreign capital through with the internal capital To become the real beneficiary of the asset control and business of the domestic company. It can also be said that despite the country's restrictions on foreign investment into certain industries, but foreign investment through the VIE structure is still in disguise.

I think it's time to get rid of embarrassment. China's gem has been established for nearly five years, the market regulations are becoming more and more sound, market development has a certain basis. Especially in the first half of this year, the gem has carried out a major reform, the listing of financial threshold significantly reduced, in the coming period, can fully explore the further reduction of profit indicators, and even allow the Internet enterprises have not yet profitable to the gem listing. Once the Internet enterprises can be successfully listed in the domestic capital market financing, the use of VIE structure to overseas indirect listing of the attractiveness will be greatly reduced, China's restrictions on the entry of foreign investment in the form of relevant provisions and the substantive aspects of the conflict does not exist.

The return of the Internet company A A-share is also a positive for investors. The Internet industry as a strategic emerging industries, has an immeasurable potential for development, its rapid growth along with a huge profit prospects, investors, despite the high risk, but also the possibility of a substantial return. Unfortunately, now some well-known domestic internet companies, with the VIE structure to go overseas listing, rich income can only be shared by overseas investors, domestic investors are difficult to share a cup of soup, this phenomenon should not continue.

(the author is a postdoctoral fellow in economics of decision-making consulting Department of the National Administration Institute)