Shoot for the Star and Land on the Moon

来源：iprdaily.com

作者：Jili Chung

原标题：Shoot for the Star and Land on the Moon

Stars are falling

This March, the U.S. Securities and Exchange Commission (SEC) sent a earthquake wave across the Pacific Ocean, shaking the global capital markets.  It adopted Holding Foreign Companies Accountable Act passed by the Trump administration.  As a result, the SEC now has the authority to demand US-listed companies to establish that they are not owned or controlled by a governmental entity in a foreign jurisdiction.

Namely, Chinese companies will have to name each board member who is a Chinese Communist Party official.  If they fail to comply, SEC could stop trading their securities.

Suddenly, dozens of Chinese enterprises are seeking alternative capital markets.  Options may include exchanges in Hong Kong, Singapore, or Shanghai.

The STAR is rising

Among those options, the Shanghai Stock Exchange STAR (Sci-Tech Innovation board) is attracting attention, especially to high-tech enterprises.

The STAR is China’s counterpart to NASDAQ.  It has become a new board in the Shanghai Stock Exchange since 2019 June.  In an continued effort to increase the size and depth of its financial market, China launched the STAR to address the innovative industries’ needs.  

The STAR’s listing rules support innovative companies that have impressive IPs but not enough revenues to obtain financing in the traditional capital markets.  As such STAR provides an additional and more structured exit option for investment in China.

A curcial component in China’s innovation ecosystem

To this end, the STAR’s listing rules set out specific disclosure requirements for the innovation achievements and quality of IPs of companies seeking to list.  Also, these rules request an elaboration on how their IPs are essential to the companies’ competitive advantage.

Because of its particular focus and purpose, the STAR has become an indispensable sector of China’s innovation ecosystem.  As such, it can serve as a valuable window for deal makers who wish to observe the development and dynamics among various driving forces in China.  The STAR is offering information otherwise unavailable or previously difficult to collect.  

Using the Star Chart as a navigating map

The book “Innovation’s Crouching Tiger” (www.ictiger2020.com) coaches readers to conduct such observations.

Anyone seeking to observe China’s innovation ecosystem now may utilize the “Star Chart,” i.e., the STAR’s market statistics or reports.  Observers now may investigate the market’s trade volume, total number, and composition of the listed companies, along with their financial performance, to get a sense of the innovation activity in China.

For example, in 2020, out of the 64 companies listed in the STAR, 14 companies belong to the health industry (21%); and 10 out of these 14 listed companies (71%) are in the medical device industry.  This profile provides a bird’s-eye view to deal-makers seeking “hot zones” to invest in China. An excellent illustration of such analysis is available at “The STAR Market Report”.

With the “Star Charts,” observers may also understand China’s innovation ecosystem’s current issues by investigating its regulatory activities.  

For example, the STAR’s listing rules cover, in length, the connection between companies’ IP portfolio and their competitiveness in the market.  The listing rules scrutinize this aspect in response to a common but misleading practice where Chinese companies often claim to be “innovative companies” based on a sizable patent portfolio that does not have any genuine value.

More insights on China’s innovation ecosystem?

See a more detailed analysis of using the Star Chart at “The Debut of the STAR Market.”

What are other observations available from this STAR Chart?  What kind of business opportunities are available for global participants?  See more insights about China’s IP ecosystem’s developments by visiting our blog at ICTiger2020.com or Facebook at ICTiger2020 for related news updates.  Contact author at Jili_ICT@springip.com.

Source：iprdaily.com

Author：Jili Chung

Editor：IPRdaily-Vapor