Recently held discussions regarding private enterprises have provided a significant boost to the confidence and momentum for the development of the private sector, while also clarifying the direction for the implementation of relevant policies. In light of this, the Shanghai Stock Exchange has quickly mobilized to launch a new wave of research efforts targeting privately-owned listed companies.

In 2024, the Shanghai Stock Exchange (SSE) plans to conduct on-the-ground visits to over 300 listed companies, with even more intensive investigations set for 2025. Reports indicate that SSE aims to meet with 100 private firms listed on the Shanghai stock market before the end of March, seeking insights and advice firsthand to effectively translate policies from paper into practical applications on the “production line.” The goal is to concentrate strategic thinking and methodologies on the broader requirements of enhancing the private economy.

The private sector garners immense significance in Shanghai’s financial markets. Currently, there are 1,248 private companies listed on the Shanghai exchange, accounting for about 55% of all companies and possessing a total market capitalization of approximately 14.22 trillion yuan (about $2 trillion). Approximately 40 of these firms boast market values exceeding 50 billion yuan (about $7 billion). The ranks of private businesses have notably swelled in recent years; around 70% of all companies that went public in the past three years are privately owned, including prominent players like United Imaging Healthcare and Huqin Technology, both of which have market capitalizations surpassing 100 billion yuan (around $14 billion).

Despite the rapidly changing external environment, privately-owned businesses in Shanghai continue to display a steady trend of growth. As of the first three quarters of 2024, firms in the private sector reported gross revenues amounting to 5.37 trillion yuan, showcasing a compound annual growth rate of 8.7% over the last three years. Their commitment to innovation is underscored by a staggering investment of 193.5 billion yuan in research and development, exhibiting a 13.4% compound annual growth rate over the same period. Moreover, the share of technology-driven private enterprises in the Shanghai stock market rose from 23% three years ago to 27% today, encompassing crucial links within key industrial chains.

In today's economic landscape, private enterprises have emerged as vital drivers of economic development, contributing exceptionally to growth, employment creation, and technological innovation. However, as these enterprises navigate their growth trajectories, they face numerous challenges and pressures.

Externally, the evolving international landscape is marked by escalating trade protectionism and an intensifying uncertainty in global economic growth—both of which pose substantial shocks to privately-owned firms that depend on international markets. Concurrently, the domestic market is undergoing significant transformations, characterized by shifting consumption patterns and heightened competition among industries. This intricate market environment complicates demand predictions, making it increasingly challenging for private enterprises to manage production planning and market expansion effectively.

Financing remains a critical hurdle, as many private enterprises grapple with soaring costs. Financial institutions often impose high thresholds for private companies seeking funds due to risk assessments, leading to elevated interest rates on loans. Consequently, the financing burden looms heavily over these firms, significantly increasing operational costs and stifling potential growth—many promising projects languish for lack of necessary capital support.

Transitioning and upgrading is an unavoidable path for private companies striving for sustainability. However, navigating this path requires exceptional innovativeness, as the rapid technological advancements and evolving market demands compel firms to allocate substantial financial and human resources to research and development and product innovation. Naturally, the unpredictability of R&D outcomes, talent shortages, and challenges in converting innovative results into applicable products impede the capacity of private firms to effectively transition.

Additionally, some private enterprises struggle with poor management practices. Flawed internal systems and decision-making processes lacking scientific rigor hinder timely responses to market shifts, causing missed opportunities for growth. A tendency to pursue diversifying strategies without adequate resources or expertise in unfamiliar domains can lead to stagnation. This diversion not only fails to meet growth expectations but also can exacerbate operational risks.
 
The Shanghai Stock Exchange, as a pivotal platform within the capital market, adheres to the objectives of “breaking the ice, gathering forces, and achieving win-win outcomes.” It is committed to alleviating concerns for the private economy and providing a secure framework for its development. During this new round of research activities, the SSE is probing into key questions such as “What is the biggest challenge currently facing your enterprise?” and “How can capital market tools help overcome bottlenecks?” This purposefully designed inquiry seeks to resolve practical issues and bolster the confidence of private enterprises, promoting a healthy and high-quality progression of the private economy.

The Shanghai Stock Exchange is determined to leverage the full potential of the capital market, offering diverse financing avenues and innovative tools to aid enterprises in breaking free from developmental bottlenecks and achieving transformation and upgrades. The SSE also aims to bridge communications between enterprises, government sectors, and financial institutions, ultimately fostering collaborative efforts among all parties involved. By strengthening information sharing and resource integration, a formidable force to support the development of the private economy is expected to materialize.