Market Strategies Of Private Enterprises In China's Internal Control Building

After thirty years of reform and opening-up in China, the private economy now is the important power of China's National Economy. As yet, the private companies going to public has become the key link in the further development of China's capital market, also, going to public is a pivotal path that the private companies transferred themselves into modern mutual enterprises.However, the imperfect internal control mechanisms within the private enterprises usually became the barriers on their roads of going public. In the traditional practice, many private enterprises biased their goals towards the market share, revenue and profits, while ignored the internal control, what resulted in the irregular practices in financial management and business process. Though the expansion of market share and increasing profits cover up the collapse crisis, the absence of those necessary internal control mechanisms rooted the seeds of risk deeply within the enterprises.After becoming public, the listed private enterprises are required by the strict supervision outsiders to abandon their old-fashioned management ideas and styles, establish modern business process and internal control mechanism and accept the supervision from the investors. The private enterprises should be well prepared for the internal risk management during the transformation when they are pursuing the goals of going public. In practice, there are a lot of enterprises, such as HongGuang and SuQiongHua, exposed to huge risk because of internal control mechanism defect once they were listed. Such cases were not only disaster for the capital market, but also brought fatal influence to the enterprises themselves, some even resulted in bankruptcy.The paper starts the discussion by talking about the requirements of going public of the private enterprises, and then examines the regulations of internal control mechanisms released by our national securities and exchange surveillance institutes. It also compares the difference of internal control mechanism requirements between the pre-listed companies and listed companies. Then the paper does a case study about a private enterprise which was a famous healthcare products company in Nanjing——Nanjing Zhongke Institute of Biology, focusing on analyzing the company's strategy for going public and its designation of steps to establish its internal control mechanisms. The case study re-inspects the transformation course of the private enterprises in China, seeking to provide practical suggestions for the transformation of the private enterprises in a best willing that improve the internal risk management of the private companies before they go to public.