Abstract

In the modern multi-level capital market system, Growth Enterprise Market played the role of communication between the main board and the venture capital system.On one side, as the lubricant of the cyclical flow of venture capital, the GEM offered the exit mechanism for venture capital, so as to support in the perspective of basic mechanism for the venture capital which is aiming for the high profit from high-tech venture.On the other hand, as the incubator for SMEs，especially for high-tech ventures, the GEM push forwarded the continuous development through offering the mechanism of resource revolution and listed companies.The introduction of GEM enlarged the scope of service in the capital market.It made the capital market, which used to be the special utility for large companies, transformed into a financial mechanism for more enterprises including SMEs and growth companies.Due to the enlarged function of GEM, its foundation or condition is stricter than the traditional capital market.In other words, it is more likely to fail.In the last 4 decades（especially the last 2 decades since 1990）, NASDAQ developed at an unimaginable speed, which used to surpass the NYSE to be the largest stock exchange in the world.Though experienced the high fluctuation in the initiation period, AIM kept a relative high growth since its establishment.From the perspective of the two well known successful GEMs including NASDAQ and AIM, a key step to success includes properly set up the function and the booming of numerous SMEs on the foundation of facilities in a market oriented financial system（such as market competition culture, market transparency and completeness under strict regulation, as well as numerous experienced institutional investors）.Scientific market operational reg ulation is an indispensable factor.However in a deeper analysis, as a financial mechanism, GEM goes well with other financial mechanisms such as the main board and venture capital.Its success needs to improve together with others.In other words, without relative market facility and financial mechanism innovation as premise, we cannot see the success of the GEM.