Net losses illustrate value of delisting

Wanfu Biotechnology (Hunan) Agricultural Development Co Ltd may again face the danger of delisting. China's securities regulator once condemned it for making misstatements in its financial reports, yet didn't take action to remove it from the stock market.

Wanfu Biotechnology earned 48.99 million yuan ($7.98 million) in revenue in the first half of 2014, a 56.19 percent drop from the same period in 2013. It also reported a net loss of 15.54 million yuan, 21.91 percent less than the same period last year. If the company continues to lose money this year, its shares will be suspended from trading.

About 88.1 percent of the listed companies that have released first-half reports have acknowledged receiving government funding. That government funding totals 32.26 billion yuan.

Wanfu Biotechnology is listed on the Shenzhen-based ChiNext. As an agricultural company, it's not unlikely that it would receive government funding. But what's the point of having an incubator board like the ChiNext if companies cannot survive without government support? Delisting is not only important to ensure that the fittest companies survive, but also to better distribute market resources. In the end, removing barriers to delisting will benefit all investors.