In Depth: China Reopens the Door for Loss-Making Tech Startups to Go Public (AI Translation)
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文｜财新周刊 全月
By Caixin Weekly Quan Yue
被按下暂停键两年后，未盈利企业IPO迎来政策窗口期。
After a two-year hiatus, a policy window has opened for IPOs of unprofitable companies.
6月18日，中国证监会主席吴清在2025陆家嘴论坛上宣布，设置科创板科创成长层，重启未盈利企业适用科创板第五套标准上市，并扩大适用标准至更多前沿科技领域。证监会也将在创业板正式启用第三套标准，支持优质未盈利创新企业上市。7月13日，上交所发布配套的业务指引，进一步明确资深专业机构投资者、预先审阅制度等规则。
On June 18, Wu Qing, Chairman of the China Securities Regulatory Commission (CSRC), announced at the 2025 Lujiazui Forum the establishment of a new "Innovation Growth Tier" for the STAR Market. He also stated that the listing pathway for unprofitable companies under the STAR Market's fifth set of standards would be reinstated, with these standards expanded to encompass more cutting-edge technology fields. The CSRC will also formally introduce a third set of standards for the ChiNext Board, supporting the listing of high-quality, unprofitable innovative firms. On July 13, the Shanghai Stock Exchange issued corresponding business guidelines, further clarifying rules for senior professional institutional investors and the pre-review system, among others.
自科创板设立起，支持未盈利企业上市即被纳入制度设计。2020年1月，泽璟制药-U（688266.SH）作为首家未盈利企业登陆科创板；字母“U”为专属标识，用以区分科创板中未实现盈利的上市公司。自泽璟制药-U上市以来，截至2025年7月16日，科创板累计已有54家未盈利企业成功上市，其中有22家上市后实现盈利，但泽璟制药-U仍未脱帽。2024年，泽璟制药-U营收5.33亿元，较上年同期增长37.91%；净亏损1.38亿元，但亏损幅度较上一年度大幅收窄50.52%。
Since the establishment of the Science and Technology Innovation Board (STAR Market), support for the listing of unprofitable companies has been incorporated into its institutional design. In January 2020, Zejing Pharmaceutical-U (688266.SH) became the first unprofitable enterprise to debut on the STAR Market. The suffix “U” serves as an exclusive designation, distinguishing unprofitable listed firms within the board. Since Zejing Pharmaceutical-U’s listing and as of July 16, 2025, the STAR Market has seen a cumulative total of 54 unprofitable companies successfully go public. Of these, 22 have turned a profit after listing, although Zejing Pharmaceutical-U has yet to shed its “U” label. In 2024, Zejing Pharmaceutical-U reported revenue of RMB 533 million, representing a year-on-year increase of 37.91%; the company posted a net loss of RMB 138 million, though the loss narrowed significantly by 50.52% compared with the previous year.
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- China has reopened the IPO window for unprofitable "hard tech" firms, reinstating the Sci-Tech Innovation Board's (STAR Market) fifth set of listing standards and launching supportive reforms as of July 2024.
- To date, 54 unprofitable firms have listed via these standards; 22 became profitable, but 16 saw post-IPO price drops, reflecting risk for secondary-market investors.
- The listing system emphasizes market-based selection and stricter disclosure, with institutional investor participation and pre-filing review now required for unprofitable IPOs.
After a two-year suspension, China has reopened the IPO pathway for unprofitable companies, particularly those in the hard technology sector, amidst broader market reforms and evolving regulatory frameworks. On June 18, 2025, China Securities Regulatory Commission (CSRC) Chairman Wu Qing announced at the Lujiazui Forum the resumption of the Science and Technology Innovation Board’s (STAR Market or "科创板") fifth listing standard for unprofitable firms and the establishment of a new "Growth Layer" for such companies. This move expands STAR Market participation to more frontier tech areas, while simultaneously piloting new mechanisms to support high-quality, innovative, but as yet unprofitable enterprises in both STAR and ChiNext markets. Supporting business guidelines clarified the role of seasoned institutional investors and introduced pre-review processes to manage risks [para. 1][para. 2][para. 15].
Since its launch, STAR Market has included unprofitable companies in its design. As of July 16, 2025, 54 unprofitable companies have listed—the first being ZJ Biotech-U, which remains unprofitable despite narrowing losses in 2024 (revenue: 533 million yuan, net loss: 138 million yuan, improved by 50.52%). Of listed unprofitable companies, about 22 have since become profitable. Such companies often operate in sectors with long R&D cycles and high investments, like biotech and semiconductors, making early access to capital crucial for technology advancement. However, the risks for investors are substantial due to immature business models and uncertain profitability [para. 3][para. 4][para. 5].
After tightening IPO and refinancing throughout 2023 in response to market volatility, the STAR Market ceased approvals of new unprofitable listings following the September 2023 IPO of Centec-U. As of mid-2024, the Shanghai Composite Index had stabilized, prompting a measured reopening to promising, yet loss-making, tech firms. Regulatory enthusiasm was palpable, with stock exchanges actively engaging with investment banks over key hard-tech projects to ensure quality and innovation alignment [para. 6][para. 7][para. 8].
Several innovations mark this policy reboot: the new Growth Layer accommodates firms with significant technological breakthroughs and large R&D commitments that are not yet profitable at IPO. Companies in this layer are flagged with a "U" suffix, and are reclassified if they later achieve profitability. The fifth listing standard is especially designed for fields like pharmaceuticals and biotech—industries characterized by long maturities and high market value (minimum 4 billion yuan market value, national regulatory approval for main products, and early clinical success for pharmaceutical firms) [para. 9][para. 10][para. 11][para. 12].
The invitation-based IPO application process is a significant change, now requiring issuers to consult with exchanges and obtain informal approval before submission, especially for those using the fifth standard. Exchanges prioritize projects supported by robust PE/VC backing and focus on critical frontier technologies, reflecting China’s strategic emphasis on self-reliance in chips and leading-edge tech [para. 13][para. 14][para. 16][para. 17][para. 18].
Recent filing examples include GPU companies Moore Threads and InnoGrit, both showing massive cumulative losses. Concurrently, the exchange issued new guidance to delineate standards for "seasoned professional institutional investors", mandating longer holding periods and higher investment thresholds to deter speculative behavior. A pre-review process allows firms to confidentially vet IPO materials with the exchange to mitigate early information leaks [para. 15][para. 19][para. 20][para. 21][para. 22][para. 23].
This regulatory evolution—from administrative approval to registration-based, market-driven standards—marks a broader and more efficient allocation of capital. The STAR Market pioneered moving away from profit-based listing criteria, emphasizing market value and disclosure in line with global best practices. While investor risks have increased (22 out of 54 listed unprofitable companies are trading below IPO price, with some stocks losing over 50% of value), the reforms aim to transfer risk assessment and growth opportunities to informed market participants, not state administrators. The success of this approach ultimately hinges on continuous investor education, strict disclosure, and holding sponsors accountable—ensuring market discipline and fostering innovation [para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31].
- Zejing Pharmaceutical-U
泽璟制药-U - Zejing Pharmaceutical-U (688266.SH) was the first unprofitable company to list on the SSE STAR Market in January 2020. The "U" suffix differentiates it as an unprofitable listed company. As of July 16, 2025, it still hadn't achieved profitability, though its net loss decreased significantly in 2024.
- Centec Networks-U
盛科通信-U - Centec Networks-U (688702.SH) successfully listed on the Sci-Tech Innovation Board (STAR Market) on September 14, 2023, as a non-profitable company. It is categorized under Standard Two for listing, not Standard Five, which is typically for biotech firms. As of the article's date, Centec Networks-U had not yet achieved profitability or "de-capped" its "U" designation.
- Wuhan Heryuan Biotechnology Co., Ltd.
武汉禾元生物科技股份有限公司 - Wuhan Heryuan Biotechnology Co., Ltd. (禾元生物) is a company that recently passed its IPO review. It is the first company to successfully pass an IPO committee meeting after the restoration of the fifth set of listing standards for the STAR Market. Despite reporting a loss of 482 million yuan over three years, its upcoming offering is highly anticipated.
- Zhixiang Jintai-U
智翔金泰-U - Zhixiang Jintai-U (688443.SH) is a company that listed on the STAR Market under the fifth set of standards. Since its listing on June 20, 2023, no other new "U" shares have been issued under the fifth standard on the STAR Market. Its status illustrates the "U" tag for unprofitable companies on the STAR Market.
- Zhongjuxin-U
中巨芯-U - Zhongjuxin-U (688549.SH) is a company that had not achieved profitability when it listed on the STAR Market. Despite this, it was allowed to list under the premise of supporting "hard technology" innovation. As of the article's publication date, the company has not yet shed its "U" designation, indicating it remains unprofitable since its listing in September 2023.
- MetaX Integrated Circuits (Shanghai) Co., Ltd.
沐曦集成电路（上海）股份有限公司 - MetaX Integrated Circuits (Shanghai) Co., Ltd. (沐曦集成电路（上海）股份有限公司), also known as "沐曦股份," is a leading Chinese chip company. In July 2025, its application for listing on the STAR Market was accepted by the Shanghai Stock Exchange, despite significant losses (a net loss of 3.29 billion yuan from 2022 to Q1 2025). This aligns with the renewed policy to support "hard technology" un-profitable enterprises in the capital market.
- Moore Threads Intelligent Technology (Beijing) Co., Ltd.
摩尔线程智能科技（北京）股份有限公司 - Moore Threads Intelligent Technology (Beijing) Co., Ltd. is a Chinese GPU company. On June 30, 2025, its application to list on Shanghai's STAR Market was accepted. The company experienced significant losses, with a net loss of 5.005 billion yuan from 2022 to the end of 2024.
- Shanghai Enflame Technology Co., Ltd.
上海燧原科技股份有限公司 - Shanghai Enflame Technology Co., Ltd. (燧原科技) is one of China's leading chip companies that initiated IPO counseling procedures. The company completed its IPO counseling registration and acceptance on August 26, 2024. As of the article's publication, there have been no further updates on its IPO progress since that date.
- Shanghai Biren Technology Co., Ltd.
上海壁仞科技股份有限公司 - Shanghai Biren Technology Co., Ltd. is one of four leading Chinese chip enterprises that began IPO辅导 in 2024. As of July 2025, its IPO registration application has been accepted but has not progressed since September 2024.
- HWZN Micro-U
慧智微-U - HWZN Micro-U (688512.SH) is a Chinese company listed on the STAR Market. It was one of 54 companies that were unprofitable at the time of their IPOs. As of July 16, 2025, its stock price had nearly halved compared to its issuance price. This indicates that while the Chinese market is opening to unprofitable tech firms, investors face risks.
- Geling Shentong
格灵深瞳 - As of July 16, 2025, Geling Shentong (688207.SH) is mentioned as one of the companies whose stock price has been almost halved, among the 22 unprofit-at-listing companies with stock price declines compared to their offering price.
- Jingjin Electric-UW
精进电动-UW - Jingjin Electric-UW (688280.SH) is an unlisted company identified by the "U" designation, indicating it has not yet achieved profitability. Its stock price has fallen by almost half since its IPO. Its ongoing losses underscore the high-risk, high-reward nature of investing in early-stage tech companies.
- 1990s：
- China's A-share issuance system operated under an administrative approval regime.
- 1999：
- Enactment of the Securities Law; legal basis for the registration-based system established.
- 2001：
- CSRC announced the abolition of the approval-based system and adoption of the registration-based system.
- Before 2005：
- Total IPO volume in China was controlled through quotas, specialized channels, or administrative approval processes.
- December 2003：
- CSRC introduced Interim Measures for the Sponsorship System of Securities Issuance and Listing.
- 2006：
- CSRC issued Order No. 32 and Order No. 37, establishing the 'Measures for the Administration of Initial Public Offerings and Listings of Stocks' and 'Measures for the Administration of Securities Issuance and Underwriting.'
- June 2009：
- CSRC issued 'Guiding Opinions on Further Reforming and Improving the IPO System,' launching new initial public offering activities.
- 2013：
- Third Plenary Session of the 18th CPC Central Committee called for advancing the reform of the registration-based IPO system.
- 2019：
- Registration-based system piloted on the STAR Market.
- January 2020：
- Zejing Pharmaceutical-U (688266.SH) became the first unprofitable enterprise to debut on the STAR Market.
- 2020：
- ChiNext board (Shenzhen Stock Exchange) implemented a registration-based IPO system.
- February 2023：
- ChiNext board announced new criteria for accepting IPOs from unprofitable companies.
- June 20, 2023：
- Zhixiang Jintai-U (688443.SH) went public on the STAR Market under the fifth listing standard.
- August 2023：
- CSRC called for 'scientifically and reasonably maintaining the normalization of IPOs and refinancing.'
- August 27, 2023：
- CSRC issued an article stating that IPO pipeline would be temporarily tightened.
- September 2023：
- IPOs of unprofitable companies halted; after Senao Networks-U (688702.SH) debuted on the STAR Market on September 14, there were no new IPOs for unprofitable companies.
- September 14, 2023：
- Senao Networks-U (688702.SH) successfully debuted on the STAR Market.
- March 11, 2024：
- CSRC Party Committee's expanded meeting mentioned supporting high-quality, unprofitable tech companies in going public.
- August 26, 2024：
- Suiyuan Technology completed registration for IPO counseling.
- September 11, 2024：
- Biren Technology completed registration for IPO counseling.
- After 'September 24', 2024：
- Shanghai Composite Index stabilized, fluctuating between 3,200 and 3,600 points, after policy stimulus.
- 2024：
- Zejing Pharmaceutical-U reported revenue of RMB 533 million and a net loss of RMB 138 million, narrowing loss by 50.52% compared to previous year.
- June 18, 2025：
- Wu Qing, Chairman of CSRC, announced at the 2025 Lujiazui Forum establishment of the STAR Market's Innovation Growth Tier and resumption of the fifth set of listing standards for unprofitable companies.
- June 30, 2025：
- Muxi and Moore Threads had their STAR Market listing applications accepted by the Shanghai Stock Exchange.
- July 1, 2025：
- Heyuan Biotechnology received approval to proceed with its IPO, the first since the restoration of the fifth set of listing standards.
- July 13, 2025：
- Shanghai Stock Exchange issued 'Self-Regulatory Supervision Guidelines No. 5' and business guidelines related to the Growth Tier and senior professional institutional investors.
- As of July 15, 2025：
- Among 589 companies listed on the STAR Market, 475 met Standard I, and others met Standards II–V.
- As of July 16, 2025：
- STAR Market saw a cumulative total of 54 unprofitable companies go public; 22 turned a profit after listing.
- By July 16, 2025：
- Out of the 54 unprofitable companies that went public, share prices of 22 have fallen below IPO price, and 11 dropped by more than 20%.
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