State-founded ZTE listed on Hong Kong's main board in 2004, a first for A-share companies

ZTE was founded in 1985 by state enterprises linked to China's aerospace ministry and became the country's second-largest telecom equipment maker. By 2004 its products sold in more than 60 countries, with 16.3 billion yuan of revenue in the first nine months of the year.

In December 2004 ZTE listed on the Hong Kong Stock Exchange as the first A-share company ever to join the main board, selling 141 million H-shares at HK$22 and raising US$398 million. Retail demand was 250 times oversubscribed, so retail's allocation rose from 10% to 50% of the offering.

Chairman Hou Weigui called the debut proof of investor confidence. About 60% of the proceeds were earmarked for overseas expansion and the rest for research and development, with a target of tripling overseas sales to 40% of revenue by 2006.

ZTE sold 141 million H-shares at HK$22 and raised US$398 million; retail demand ran 250 times oversubscribed, and the stock closed 11% higher on debut.

ZTE had state roots from 1985; listing brought market discipline.

It was the first A-share company listed on Hong Kong's main board.

US$398m raised; about 60% earmarked for overseas expansion.

Retail demand 250x oversubscribed showed investor trust.

Being first can be the strategy: the first A-share company on Hong Kong's main board used the listing as proof of transparency and as a cheaper platform for global capital.

ZTE used the capital and disclosure discipline to grow into one of the world's top telecom equipment vendors; its 2004 annual report called the listing the financial platform for its globalization strategy, and the BBC later cited it as a flagship of China's hybrid state-market model.