From medical treatment to petrochemical, the Internet to food and beverage, and infrastructure to animation, the business of listed companies covers energy, finance, communications, manufacturing, transportation and other key industries, all of which are closely related to people's livelihood. According to the 2020 Fortune China 500 List, the total revenue of China's top 500 listed companies reached 50.5 trillion yuan ($7.26 trillion) in 2019. It means the total revenue of the companies on the list exceeded half of China's GDP of 99.1 trillion yuan ($14.24 trillion) in that year.

With the growing influence of listed companies on people's daily life, the question of whether or not companies should go public has gained more public attention. Supporters believe that going public will open up a new financing channel and improve the company's reputation. Opponents argue that public listing will bring a variety of transaction costs to the company, and will lead to decentralization of control and open the possibility of hostile takeover.

Chen Zhiwu

Economist

Beijing

Besides raising more money, a public listing has plenty of other benefits for companies. The stock market provides entrepreneurs with a possibility for monetizing and pricing the expected income in the future. With this possibility, they can arrange their wealth more flexibly and set a long-term development strategy for the company. If the company does not go public, entrepreneurs cannot liquidate their stocks and the success of the company can only be assessed annually, rather than instant recognition.

After going public, the shareholder base will be expanded, which could diversify the company's risk. It is also possible to introduce other major shareholders, or even develop in the direction of management by professionals, instead of just relying on descendants or other relatives of the founders to take over the company in the future.

Xiao Weiya

Management trainer

Guangdong Province

For a company, going public is conducive to increasing the proportion of its own capital, improving its capital structure as well as devolving the inherent operating risks to the social capital market. According to their own strategic needs, companies can use various financial instruments to carry out capital operations such as asset acquisition and reorganization, so as to enhance liquidity and realize equity appreciation. In addition, going public will bring incremental capital and increase the confidence of potential financial institutions, and correspondingly lower borrowing and other financing costs. It also contributes to the establishment of a modern enterprise system and improvement in the corporate management structure.

For employees, if their shares have value, they will have greater motivation and will be more proactive. Various equity incentives such as stock options will make employees deepen their bond with the company. For investors, going public can allow them to share the fruits of enterprise development and realize capital appreciation.

Xu Jian

Lawyer

Jiangsu Province

China's current laws and policies give the most support and preference to listed companies, such as allowing listed companies to issue bonds and use the market value of shares traded on the secondary market as collateral to raise funds from banks.

Listed companies are followed by media and shareholders who pay attention every day, which is conducive to enhancing the company's popularity and influence, establishing its brands, expanding the market as well as reducing costs.

Moreover, listed companies with low long-term shareholders may face problems such as decentralization of control or hostile takeover.

Ren Zhengfei

Founder and CEO of Huawei

Guangdong Province

Huawei does not allow capital to come in easily because the greedy nature of capital will destroy the realization of our ideal. We are a company that strives for our ideal, instead of money. Imagine if we were a listed company and were unreasonably sanctioned by certain countries, our stock price might plummet, and the company might collapse.

Huawei has always adopted an incentive mechanism within itself, which helps employees truly integrate with the company, stick together and strive to realize our ideal, instead of selling their shares and walk away after the company goes public.

We continuously focus on investing in the future. Listed companies may produce appealing financial statements in the early stages of listing and make high short-term profits, but one of Huawei's characteristics is that it turns its potential profits into current research investment and invests in the technology such as 5G. Although today we are not a listed company and may encounter some financial difficulties, we will not cut research funding. For a company or even a country, without investment in early basic scientific research, there will be no core competitiveness in the future.

Zhang Ping

Financial commentator

Shanghai

Listing is not the only criterion for measuring a company. Enterprises with abundant funds, stable cash flow and healthy budget can stay as they are, and there is no need to go public.

In today's market, any business strategy that could make a firm survive and grow is a good strategy because each firm's situation is different. Now, many enterprises are eager to go public and raise money, rather than creating a good product.

In particular, some listed companies deposit the funds raised in the bank, or take the money to engage in real estate investment, which is a waste of limited market resources and against investors' expectations. What's more disturbing is the fact that the performance before listing is great, but immediately after listing, the performance changes and profits plummet.

Guo Shiliang

Professional investor

Guangdong Province

After an enterprise goes public, its financial reporting needs to be transparent for the regulators and investors, which means more energy and cost need to be devoted to information disclosure.

As a listed company, it is necessary to be responsible to investors, and bring continuous returns on investment. Once there is a problem with the company's financial statements, suspected fraud in issuance of shares, or violation of the law, listed companies may face heavy penalties or even the risk of delisting, leading to huge investor claims.