Policy support, funding to fuel tech consumption

SHANGHAI: Efforts to promote new types of consumption will pick up momentum this year, as the number of supportive measures of the central government will likely increase, said experts.

Zi Meng, chief retail industry analyst at Guotai Junan Securities, said technologies, products and services relating to 5G, cloud computing, artificial intelligence and the internet of things best define new types of consumption, spawned by the new round of industrial revolution.

Together with 27 other departments, the National Development and Reform Commission recently released an action plan aiming to nurture new types of consumption at a faster pace.

The 24 detailed policies have attached great importance to social financing, which includes initial public offerings (IPOs), refinancing, corporate bonds, convertible bonds and asset-backed securities.

Private equity and venture capital firms should play a bigger role in supporting new types of consumption, the action plan stated. The central government has resolved to help develop new types of consumption in China, which is evident from the number of guidelines and regulations released over the past few months.

The 14th Five-Year Plan (2021-25) passed by the National People’s Congress in early March has highlighted the development of new types of consumption. In late September, the State Council released a guideline which is designed to drive the growth of new types of consumption via new business models and patterns.

The guideline also pointed out that investment and financing channels should be expanded for the novel consumption businesses. Under the circumstances, the quality of traditional products will be improved, content consumption will become more common, demand for services will rise, and consumption scenarios will be enriched.

Technology-focused ChiNext at the Shenzhen bourse, which mainly serves growth enterprises, will support the integration of traditional industries, new technologies and business models, said Zhang Lichao, senior analyst of Guosen Securities.

As such, the ChiNext board will be appealing to new consumption companies that are characterised by the combination of digitalisation and consumption.

Data from Chuancai Securities showed that new consumption companies managed to receive over 400 billion yuan (US$61bil or RM253bil) in financing via IPOs or refinancing in 2020, up 50% from a year earlier.

Chen Li, chief economist of Chuancai Securities, said various financing channels provided by the capital market have accelerated the development of companies specialising in new forms of consumption businesses.

IPOs, corporate bonds, convertible bonds, or listing on the National Equities Exchange and Quotations are all possible options of raising funds. PE and VC firms have also funded such companies. The value of IPOs and refinancing relating to new consumption firms exceeded 96.8 billion yuan by March this year, up 36% yearly. ─ China Daily/ANN

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