Stop unnecessary backing for IPOs

It's normal for local governments to support local companies' ambitions to be listed. However, if the IPO is against the company's will and the local government forces the company to go public, the local government's actions are actually disturbing the companies' natural development, says an article in the Beijing News. Excerpts:

Wanfu Biotechnology (Hunan) Agricultural Development, which is being punished by the China Securities Regulatory Commission for financial fraud, is an example of a listed company that was once "supported" by its local government.

According to media reports, Gong Yongfu, the president of Wanfu Biotechnology, did not have plans for a listing initially, but officials of its local government, Changde in Hunan province, more than once persuaded him to go public.

In fact, such cases are not rare in China. Local governments often "actively offer help" to support their local companies. This is because listed companies are positive for the work performances' evaluations of local officials and the images of cities.

However, IPOs are not the only dream destination for companies, especially for those that don't have enough knowledge and experience of capital markets. Once a private company becomes public, the company's management has to be well prepared for possible pressure, as well as tough supervision and regulations.

So the local governments should stop the unnecessary "support". IPOs are not for every company, and the opportunities to be listed should be given to companies with a strong desire to go public and good performances.