Tens of thousands of China-based semiconductor companies have recently gone out of business, and numerous IPO processes have been halted or terminated. As a result, Chinese authorities are said to now encourage mergers and acquisitions (M&As) rather than initial public offerings (IPOs) to build stronger companies. The aim is to concentrate resources on technological advancements into larger entities, thus building strong companies rather than a huge number of weak companies.
To better allocate resources and promote innovation, China has introduced new laws, such as the STAR Market Eight Provisions, to encourage M&A rather than IPOs for tech companies. The China Securities Regulatory Commission aims to create a favorable environment that supports tech companies with so-called critical technological capabilities. Essentially, China's government wants promising tech enterprises to receive the support needed to thrive, but without IPOs.
