Local small and medium-sized enterprises learned the ins-and-outs of how to raise capital through floating initial public offerings (IPOs) on the Hong Kong and Singapore exchanges at a seminar held in Changchun yesterday.

Local companies, especially private firms that must have international financing and marketing to survive with China's accession to the World Trade Organization (WTO), were involved in the seminar.

"The local private economy played a more and more important role in the past decade in Changchun, one of China's traditional industrial bases. Last year, private enterprises generated 37.2 billion yuan (US4.5 billion), accounting for 34 per cent of the Changchun gross domestic product (GDP). Such businesses contributed 2.04 billion yuan (US$245.78 million) in taxes and provided 880,000 jobs.

However, most faced capital bottlenecks after the first round primary accumulation, said Zhu Hong, an official from the Economic and Trade Commission of Changchun city government.

"Most of them now are hungry for capital to expand scale and markets. But they could hardly get loans from local State-owned banks due to their shabby assets. Overseas financing provides an alternative," said Zhu.

Local banks were rather frigid compared with their foreign counterparts or even those in Shanghai and Guangzhou, said Qiu Shuqin, chief executive officer of the Changchun Longyang Group, a private enterprise specializing in soybean processing.

"It was nearly impossible to get a loan from local banks since we usually had no corresponding fixed assets for mortgages," said Qiu, who was still in need of capital even though her companies had gotten loans from State-owned banks three times. "We had to choose party or perish."

Overseas financing was rather flexible since it took an all-round perspective of companies' assets and abilities, which included management quality, technology, and the future of market, said Hu Cuiping, director from United Overseas Bank (UOB).

"There are many famous brands in Northeast China and more are emerging with more companies switching to being listed companies. Capital is vital for the latter because they need money to expand in scale and market," said Hu.

There were 247 Chinese mainland enterprises listed in Hong Kong by October and the financing volume touched HK$753 billion (US$97 billion) during the last 10 years. Changchun now has two companies listed in Hong Kong, Global Bio-chem Technology Group Company Ltd and Daxing Pharmaceutical Company Ltd.

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