Li Xiaojia: Can't Miss New Economy Company

On the 24th, Li Xiaojia, Chief Executive Officer of the Hong Kong Stock Exchange, published the latest blog article "Where is the Road After Dream Talk - Eight Questions and Eight Answers on Shareholding Structure", once again discussing the impact of Alibaba's listing storm on the Hong Kong listing system impact and thinking. Judging from Li Xiaojia's article, his attitude is inclined: Hong Kong's capital market should make limited changes for a generation of innovative technology companies, which is related to Hong Kong's long-term interests.

Let's take a look at how the Hong Kong Stock Exchange, one of the world's most active capital markets, thinks about the demands of emerging companies in the Internet age. When Li Xiaojia talked about why the shareholding structure and investor protection were re-raised in "One Question", he believed that Hong Kong's financial industry has reached the major issue of "meeting the historical opportunities brought by the new economy," while the Hong Kong Stock Exchange "still There is no answer." Li Xiaojia believes, "In the next wave of the new economy, Chinese innovative companies will occupy a considerable proportion. For Hong Kong, losing one or two listed companies may not be a big deal, but losing an entire generation Innovative technology companies are a big deal, and it is a great pity to miss out on this generation of new economy companies without serious argumentation and consultation.”

From this question, we can feel that even if it is expensive for Hong Kong A leader in the financial industry, the Hong Kong Stock Exchange is still facing the pressure of being "reformed" in the Internet tide. Li Xiaojia believes that whether to accept a new wave of innovative companies, "This issue is related to the public interest of Hong Kong, and it is urgent and cannot be avoided. This requires us to have the commitment and the courage to further find the answer, otherwise, a major opportunity for planning the future of the Hong Kong market will be wasted. Therefore, I decided to first express my humble opinion here, hoping to inspire more opinions The rational and intelligent discussion of this question by insightful people will find the best answer for Hong Kong."

Next, Li Xiaojia explained what "innovative companies" are and why they deserve investors to give new thinking on corporate governance mechanisms. He believes that "the biggest difference between an innovative company and a traditional company is that the key to its success is not capital, assets or policies, but the unique dreams and vision of the founders. Looking back at the growth history of these innovative companies, it is not difficult for us to Discover that every great business plan begins with a great dream of its founder. Apple's success stemmed from Jobs' dream of inventing a personal computer that changed the world, and Facebook's success stemmed from Zuckerberg's desire to change with the Internet The dream of the way people communicate, Google's success stemmed from Page and Brin's dream of downloading the entire Internet through links. The great dreams and ideas of these founders made innovative companies their most important core assets. There is no doubt that for such companies, founders should cherish their own "children" more than anyone else and care more about the long-term healthy development of the company, which is precisely why many investors love such companies. "

In this passage, Li Xiaojia affirmed the core role of founders in innovative companies, and then he pointed out the "weak" status that such founders often show in front of capital: "Innovative companies Another important common feature is that their founders had little money when they started their businesses and had to raise funds from angel investors, venture capital, private equity funds, etc. to realize their dreams, which made their equity in the company constantly diluted ; once the company goes public, their stake will decline further and their status as the helm of the company’s development will be threatened. They may even be easily removed from the board when the company’s long-term and short-term interests conflict.”

After a Q&A that seemed to be defending Alibaba's request for a shareholding arrangement, Li Xiaojia further discussed whether the Hong Kong Stock Exchange could find institutional changes to accommodate innovative companies, "The easiest way is to maintain the status quo, Do not give founders any form of special power over control of the company, but this comes at a cost... and as opposed to maintaining the status quo, the other extreme is allowing public companies to issue dual or multiple classes of stock with weighted voting rights (i.e. The shares held by the founders have higher voting rights than the general public.) This type of system has been operating for many years in many overseas markets in the United States and Europe, and large IT companies such as Facebook and Google have adopted this multi-layered shareholding structure to go public.”

Li Xiaojia was noncommittal about these two extremes, and proposed a "compromise plan", that is, "give the founder the right to nominate the majority of directors" under the conditions of "error correction ability and validity period".

Inevitably, the issue of Ali's "partner listing" will still be discussed. Li Xiaojia's answer is very clear, "The traditional sense of 'partnership' and the corporate system are two completely different corporate governance mechanisms, it is difficult to imagine how to combine them... Listed companies can only use equity Based on the corporate governance mechanism, regulators will not and will not be able to rub together the incompatible 'water' and 'oil' at the level of the listed company system."

Li Xiaojia, President of the Hong Kong Stock Exchange This blog post has no direct impact on companies that have no plans to go public. But from his serious thoughts on "new economy companies" and "innovative companies", it can be seen that the tide of the Internet has swept through almost all industries, and the seeds of innovation are increasingly dependent on it as the foundational soil. We may guess that in the eyes of the Hong Kong Stock Exchange, companies with future prospects must be those companies that are connected to the Internet in some way. Tencent, which is listed on the Hong Kong Stock Exchange, has become the first Chinese Internet company with a market value of over US$100 billion. It can be seen that not only the Hong Kong Stock Exchange, but also investors hold similar views.