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Shandong pushing for IPOs

By Ding Qingfen (China Daily)
Updated: 2008-03-31 13:49

Following the lead of neighboring provinces Jiangsu and Zhejiang, East China's Shandong, which ranked seventh in 2007 in terms of gross domestic product (GDP) per capita, is pushing for IPO (initial public offering) initiatives within the region.

The local government is considering copying the success of central Shandong's Yiyuan county, which has gone from one of the province's poorest districts to an emerging economic engine by creating an IPO-friendly environment in recent years.

On March 10, about 270 high-level officials from roughly 30 major Shandong counties, drove to Yiyuan in Zibo city, a well-known revolutionary base in a mountainous area whose residents have been surviving by growing fruits and vegetables for the last five years.

Each official came with the same question in mind: How could an once poverty-stricken area rocket up to 10th place in terms of GDP among the province's 60 counties in only half a decade?

The secret is the IPO plan. During the 2002-07 period, the county successfully assisted four companies to debut at home and abroad, and now they are all leading their respective industries and have become regional economic pillars. In 2007, they were valued at 10 billion yuan ($ 1.43 billion)  in total, 10 times what they were worth before listing, and they contributed 25 percent of Yiyuan's tax income.

The visiting officials were all wondering if they could mimic the dazzling success story.

IPO-driven economy

The idea happened to coincide with the economic development blueprint designed recently by the Shandong government.

According to a statement from the Shandong development and reform commission issued on its website on March 17, the government will attempt to increase economic status mainly through promoting IPO projects. By 2010, at least 60 companies from the 30 counties will be listed, and five out of the 30 counties will have 10 companies listed.

Experts say strengthening the regional economy by boosting financial channels is a wise move. "The more companies that list, the more it boosts the local economy. Yiyuan provides the best example," says Sheng Xitai, president of Lianhe Securities.

But Yiyuan is not alone. By the end of 2007, in Jiangyin county, in central Jiangsu province, more than 20 companies had listed, and in Yangxunqiao town of Shaoxing county in Zhejiang province, there were eight.

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