iFlytek lists on the Shenzhen Stock Exchange

A hard start in a market dominated by multinationals

iFlytek's chairman Liu Qingfeng later described the competitive situation the company faced: in 1999, he said, China's speech market was controlled by IBM, Microsoft and Motorola ^[2]. Speech recognition and synthesis are hard technical problems, and a young company trying to sell them into a market held by large international firms had to find a way to make money quickly.

Financially, the early years were difficult. According to the China Securities Journal, iFlytek ran five consecutive loss-making years before reaching break-even in 2004, and only from 2005 did it enter a period of rapid earnings growth ^[1].

Changing what it sold

Part of the turnaround came from a change of strategy. Instead of trying to sell only end products, iFlytek began supplying speech technology modules to customers including Lenovo, Huawei and ZTE, and in 2002 and 2003 it rolled out telecom-grade, desktop and embedded chip-level solutions ^[1]. Supplying modules means other companies embed the speech capability in their own systems, which widens the reach of the technology and gives the supplier recurring business with large customers.

Choosing the A-share market

As the company prepared to raise public money, the question of where to list came up. Zhu Linan, then president of Lenovo Investment, travelled to Hefei overnight to persuade iFlytek to list on the A-share market rather than on Nasdaq ^[1]. The company followed that advice, and the listing was arranged on the small and medium enterprise board of the Shenzhen Stock Exchange.

The first day of trading

iFlytek's shares began trading on the Shenzhen Stock Exchange's SME board on 12 May 2008 ^[1]. Demand on the first day was strong: the stock opened at 28.21 yuan, 122.83 percent above the issue price, meaning the first trade was at more than double the price at which the shares had been sold, and it closed the session at 30.31 yuan ^[1].

What the listing meant

Two firsts were attached to the event. At the time, iFlytek became the only listed company in China's intelligent speech industry, and it was also the first listed company in China founded by university students ^[2]. For a sector that had been shaped by large foreign technology firms, having a domestic speech company on a Chinese exchange gave investors a direct way to hold the industry.

The longer-run record is visible in the company's valuation. Its market capitalisation grew from an initial 3.248 billion yuan to about 46 billion yuan by the time of the 2017 article that reported these figures ^[2]. That growth reflects how speech technology moved from a specialised tool sold to telecom equipment makers and computer manufacturers toward something used far more widely, and it also explains why the 2008 decision about which market to list on is still remembered as a turning point for the company.