Chen Nanxiang, Executive Vice Chairman Of China Resources Micro: To Help Semiconductor Enterprises Participate In Global Competition, Is The Listing Of Science And Technology Innovation Board A Means, Not An End

On July 22, 2020, the opening of the science and technology innovation board ushered in its first birthday. Looking back on the future, there have been a lot of institutional breakthroughs in the science and technology innovation board, including the first red chip enterprise going public, the first enterprise with the same share but different rights.

Among them, attracting red chip enterprises to return is a highlight and an important mission of the establishment of the science and technology innovation board. From the initial support for the return of red chip enterprises to the continuous introduction of policies supporting red chip enterprises by the regulatory authorities, the listing of red chip enterprises has become a footnote for the improvement of the inclusiveness of the science and technology innovation board.

In February 2020, the first company to return to China Resources micro board was established. Since then, China Resources, as the first person who has been listed on the market, has been the first person who has ever been listed in China Resources.

On the first anniversary of the opening of the science and technology innovation board, the 21st century economic reporter interviewed Chen Nanxiang, executive vice chairman of China Resources Microelectronics Co., Ltd., and exchanged views on the listing experience of the science and technology innovation board, the return experience of red chip enterprises, and the development of integrated circuit industry.

Chen Nanxiang joined China Resources Microelectronics in 2002 and served as the deputy general manager, responsible for international cooperation, strategic planning, investment and M & A. during this period, he also served as the managing director of wafer foundry business company, the managing director of integrated circuit design business company, and the general manager of China Resources Microelectronics R & D center. In 2016, he served as the executive vice chairman of China Resources Microelectronics Co., Ltd, He is an expert in the semiconductor industry.

Exploring the way for red chip enterprises to return

As the first red chip enterprise to return to China, the difficulties encountered by China Resources micro during its return to a are self-evident. This can be seen from the audit time: the application of China Resources Micro Technology Innovation Board was officially accepted on June 26, 2019, and the meeting was closed on October 25 of that year. The waiting time for registration is 81 days from October 31, 2019 to January 20, 2020.

Chen Nanxiang recalled to reporters that at that time, he mainly faced three difficulties. "One problem is the face value. The face value of China Resources micro stock is Hong Kong dollar. Due to the exchange rate changes between RMB and Hong Kong dollar, there may be many unexpected things. The second is the issue of jurisdiction. We are a limited company, and the mainland will become a joint stock limited company. The most important difference is that China Resources micro is a red chip enterprise and has jurisdiction problems. If the listing of China Resources Microelectronics on the science and technology innovation board involves shareholder litigation, our assets are all in China. According to the mainland law, assets can be pledged as a means of preservation. However, since the company is registered overseas, there are many inconsistencies between the mainland law and the overseas law in terms of implementation. "

The third is the system level. Chen Nanxiang said that the problems encountered at that time were solved by the regulatory authorities, and some systems were also in the process of continuous improvement. But in fact, there are still some systems to be improved. "In the past, red chip companies in China first wanted to issue depository receipts rather than stocks, but we issued stocks in China through red chips, which brought about some indirect problems. For example, there was no detailed rules for the reduction of major shareholders."

At present, with the return of red chip enterprises, the relevant policies are gradually improved. Recently, the Shanghai Stock Exchange issued the notice on matters related to red chip enterprises' application for listing on the science and technology innovation board, which made targeted institutional arrangements for the handling of gambling agreements involved in red chip enterprises' application for listing on the science and technology innovation board, which is considered to be the "last mile" for the domestic listing of red chip enterprises.

In this regard, Chen Nanxiang said, "at present, there is a lot of regulatory support in supporting red chip enterprises to return to the science and technology innovation board. For example, the return of SMIC is very fast, whether it is in the approval of Shanghai Stock Exchange or the registration of China Securities Regulatory Commission. In fact, after the listing of China Resources Microelectronics, SMIC's process is very smooth when facing problems such as the par value of the stock is foreign currency and the liquidity of investors. "

Chen Nanxiang further said, "as a listed subject, red chip enterprises themselves should not be treated differently. They are a type of domestic listed companies. Just like we talk about state-owned enterprises and private enterprises, they are only different investors. The difference lies in their choice of management mechanism and system."

Helping semiconductor industry to participate in global competition

In addition to having the aura of "red chip first share", in terms of business, China Resources micro is also one of the top enterprises in the semiconductor industry, and it is the largest IDM semiconductor company in China. In a capital intensive industry, landing in the capital market will also help China Resources micro achieve better development.

Chen Nanxiang believes that domestic semiconductor enterprises should not only focus on domestic, but also on global competition. "The semiconductor industry is a global industry and a winner take all industry. As long as the products and technologies are leading, it can go global. Take power semiconductors as an example. The market of power semiconductors is very large in China. However large the market is in China, it only accounts for 40% of the global demand, and 60% of the market is overseas. In addition to import substitution, as long as the products are good, they can go global and obtain another 60% of the market. Once we get that extra market, our progress will multiply. "

When participating in the global capital market, it reflects the value of enterprises. "The modern corporate governance structure that we have reached in accordance with the requirements of the science and technology innovation board, as well as strict information disclosure, have improved the transparency of the company. In the future, we will go to the international stage one day, and customers and partners in the world will be able to understand the enterprise at a glance. This is the way for listed companies to make full use of the capital market." Chen Nanxiang said.

Chen Nanxiang said that on the day when China's semiconductor industry is truly successful, a virtuous circle of four in one must be formed. "First, R & D investment, which is related to the science and technology innovation board; second, leading technology and talent acquisition; third, leading market share, which is China's regional advantage; fourth, higher profitability, first reflected in gross profit margin, which in turn supports high R & D investment, forming a virtuous circle."

However, Chen Nanxiang also admitted that the number of enterprises listed on the science and technology innovation board is large, but the scale is relatively small. "The science and technology innovation board has given many entrepreneurs the dream of listing, which will bring some difficulties and challenges to the domestic resource integration in a short period of time. Some science and technology innovation board semiconductor companies, their stock market value relative to their own profitability, in fact some overheating. While reflecting the enthusiasm of investment, it also shows that the valuation is a little overheated, and eventually it needs to return to rationality, and the profitability of the enterprise should match the trend of valuation. On the whole, the science and technology innovation board is very important, but listing on the science and technology innovation board is always a means, not an end. "

Chen Nanxiang believes that in the face of the rise and fall of stock prices, enterprises should first of all not forget their original intention, and secondly, they should conscientiously manage the enterprise, especially to make the medium and long-term value. As far as China Resources Microelectronics is concerned, the company has defined two stages: the first stage is to be world-class and China's leading; the second stage is to compete with world-class enterprises in China's market to reach the world's leading level and achieve success in the Chinese market through benchmarking.

In addition, Chen Nanxiang also introduced to reporters the business highlights of China Resources micro this year, "mainly in consumer electronics and industrialization. Consumer electronics is mainly aimed at the demand of frequency conversion of household appliances, among which the core is intelligent power module (IPM). On the basis of three years of research and development, intelligent power module has realized industrialization this year, and IGBT has a growth rate far higher than double-digit this year. "