The year of the Snake has marked a significant milestone in the realm of Initial Public Offerings (IPOs) in China, heralding the first company, the Zhongce Rubber Group Co., Ltd., to have its IPO approved after nearly two years of waiting in line. With a firm intention to make its debut on the Shanghai Stock Exchange's main board, Zhongce Rubber's journey through the IPO approval process is noteworthy, particularly in the context of the market dynamic and its implications for other companies aspiring to follow suit.

On February 13, the Shanghai Stock Exchange officially approved Zhongce Rubber's initial public offering, making it one of only two companies that have secured IPO approvals this year. The other company, Marco Polo Holdings Co., Ltd., also found success in its IPO application process, having received approval from the Shenzhen Stock Exchange. Interestingly, the Beijing Stock Exchange has not yet convened a listing committee meeting this year, indicating a quieter landscape for listings at that exchange.

According to insights from investment banking professionals, the limited number of IPO applications currently being processed can be attributed to the Chinese New Year holiday, during which many businesses were less active. They mentioned that numerous applications still require companies to submit additional financial reports or update their financial data, creating delays in the approval process. The result is that fewer businesses have made it through the gauntlet to gain approval to access public markets, leading to a year-to-date figure of merely 217 companies awaiting their chance to go public.

Looking at the revised policies surrounding IPOs, there seems to be a systemic effort to bolster listings for quality technology-driven companies. Recent government initiatives aim to refine the mechanisms for accurately identifying such firms while also facilitating the listing of promising yet unprofitable tech entities. Meanwhile, support is also extended toward specialized small and medium-sized enterprises, empowering them to access the IPO market. This regulatory framework adjustment appears aimed at creating a conducive environment for innovative businesses to thrive, thereby catalyzing economic growth.

Overall, industry analysts view these developments positively, suggesting a gradual improvement in the overall IPO climate compared to the previous year. Despite only a small fraction of companies currently navigating the IPO process, there remains an optimistic expectation that an uptick in market conditions may soon lead to an expansion in the number of IPOs.

However, the nearly 217 companies standing by for an IPO approval will face considerable scrutiny as they prepare for their opportunities. Among these, more than 40% of them are focused on listing at the Beijing Stock Exchange, highlighting a strong interest in that platform. The breakdown by exchange reveals that out of the 217 firms, 98 are targeting the Beijing Stock Exchange, 60 are aiming for the Shanghai Stock Exchange, and 59 for the Shenzhen Stock Exchange.

Moreover, of those currently awaiting approval, approximately 176 are under the new registration system, while 41 sought a transition to this classification, indicating a gradual shift towards a more streamlined and efficient process. In stark contrast to some of the previous years, where waitlists swelled to 662 companies at this same time in 2024, the current figures showcase a noticeable reduction of over 445 companies, reflecting a nearly 60% decrease.

As we look more closely at the status of the companies in waiting, a significant proportion — nearly 40% — find themselves in the inquiry phase of their reviews, which entails additional questions posed by regulators. Many of these companies are still in the early stages of inquiry, necessitating further dialogue with the regulatory bodies.

Yet, as hopeful applicants line up, some businesses have chosen to withdraw their IPO applications entirely. Since the beginning of 2025, approximately 30 companies have exited this arduous process, signaling potential difficulties in the road ahead for many entities attempting to secure their public profiles. The recent termination of Zhengheng Power's IPO application, for instance, showcases this trend. After starting the IPO journey two and a half years ago, they eventually withdrew their application for reasons related to regulatory inquiries.

When examining the broader implications of IPO terminations this year, data from the stock exchange indicates that at least 29 companies have canceled their listings across the three major exchanges, with half of those originally planning to debut on the growth-oriented Shenzhen Stock Exchange. Among the 29, the Shanghai Stock Exchange accounted for four withdrawals, whereas the Shenzhen Stock Exchange had the bulk at 15, and 10 from the Beijing Stock Exchange. Notably, several companies opted to withdraw on the same day, emphasizing the precarious nature of the current IPO environment.

As 2025 unfolds, a potential recovery of the IPO market is on the horizon. The year-to-date figures show that the Beijing Stock Exchange has accepted only one application thus far, while the Shanghai and Shenzhen exchanges remain inactive on the new listings front. The one new application stems from Shenzhen's Fuhai Precision Manufacturing Co., Ltd., which aims to raise nearly 330 million yuan through its IPO.

Examining the performance across the exchanges reveals that the Shanghai and Shenzhen counterparts each have seen one firm successfully navigate the IPO process this year. Nonetheless, it is also worth noting that just two months back, the Beijing Stock Exchange made headlines with a series of IPO acceptance spikes, receiving 32 applications in December alone and markedly increasing investor interest.

Forecasting the future IPO landscape, several financial institutions predict a gradual uptick in this sector throughout 2025. Industry analysts from major firms anticipate an increase in issuance rates, projecting that the number of companies going public may reach between 150 and 210 and potentially raising around 160 billion yuan combined. Such optimistic predictions underscore a shared belief that the IPO market will recover from the recent downturn, as both Ernst & Young and Deloitte also reflect similar sentiments about a favorable shift in A-share IPO activities.

As the landscape evolves, companies and potential investors alike will be keenly observing how the regulatory environment and economic conditions interplay to shape the future of public listings in China. The anticipated improvement in business conditions could lead to new opportunities for the 217 companies in the waiting line, as they each strategize their next moves towards realizing their IPO aspirations.