Merger and acquisition activity on the Beijing Stock Exchange (BSE) has intensified this year, driven by a combination of policy support, industry demand, and a favorable market ecosystem. Data from Wind shows that, as of August 7, BSE-listed companies have disclosed 66 M&A plans year-to-date, a 22% increase from 54 plans during the same period last year.

Experts interviewed believe that the uptick in M&A on the BSE results from multiple factors, including policy incentives, core industrial needs, and market conditions. Current transactions are characterized by a focus on core businesses and efforts to strengthen supply chains. Looking ahead, M&A on the BSE is expected to see both volume and quality improvements, with a sharper focus on fostering new productive forces and integrating industry chains.

Policy Incentives Drive Momentum

Regulators have been deepening reforms in M&A, rolling out measures like the "Six M&A Policies" to encourage activity and invigorate the market. As a key platform for innovative small and medium-sized enterprises (SMEs), the BSE has refined its M&A framework by introducing a "small and fast" review mechanism and simplified procedures, supporting companies in using M&A to bolster their supply chains. In October 2025, the Beijing Municipal Financial Office and six other departments issued guidelines to promote M&A and enhance the quality of listed companies, emphasizing the BSE's role as a primary venue for SME M&A transactions.

"M&A is a natural step for companies seeking external growth and a vital tool for market value management," said Zhou Yunnan, founder of Beijing Nanshan Investment. "Through acquisitions, firms can efficiently integrate resources, expand operations, and optimize industrial structures. Smaller BSE-listed companies are attractive targets for industrial capital, and policy support has fueled the recent surge in activity."

A long-time industry observer noted that most M&A cases on the BSE this year involve "chain reinforcement," focusing on vertical or horizontal integration around core businesses, with transaction values typically ranging from tens of millions to hundreds of millions of yuan. For example, on August 5, Changsha Zuxing New Materials Co., Ltd. (Zuxing New Materials) announced a cash investment of 60 million yuan in Hunan Zeming New Materials Co., Ltd. (Zeming New Materials), with existing shareholders converting 39.84 million yuan in debt into equity. Zuxing New Materials also acquired a 60.10% stake in 30 million shares of the target company for 91,500 yuan, making it a controlling shareholder and consolidating its financial statements. Zuxing New Materials' aluminum-silver powder, a key raw material for metal powder coatings, offers high synergy with Zeming New Materials in downstream customers, client development, and pricing.

In June, Beijing Guangsha Huaneng Technology Co., Ltd. (Guangsha Huaneng) announced a 20 million yuan investment in Wuxi Keluo Ultra-Low Temperature Technology Co., Ltd. (Wuxi Keluo) for a 10% stake. This move is expected to create significant synergies with Guangsha Huaneng's existing high-efficiency heat exchange technology and pressure vessel R&D and manufacturing capabilities.

According to Tian Lihui, a finance professor at Nankai University, after years of accumulation, BSE-listed companies are entering a phase where M&A is essential for growth, driving market activity.

Focus on Fostering New Productive Forces

M&A cases on the BSE are heavily concentrated in sectors like new materials, high-end equipment, information technology, and new energy, with a clear emphasis on developing new productive forces. The objectives are primarily to fill gaps and expand business scope. For instance, in August, Panzhihua Bingyang Technology Co., Ltd. announced plans to acquire 99.78% of the shares in Zhixing Liangzhi Industrial Co., Ltd., a company listed on the New Third Board, through a combination of share issuance and cash payment.

Zhou Yunnan noted that active M&A benefits BSE companies by enabling proactive external acquisitions, rapid resource integration, and efficient expansion. It also helps attract new investors and resources, opening up new growth avenues and boosting valuation potential. He expects M&A activity on the BSE to continue rising.

The industry observer added that M&A on the BSE is poised for both quantitative and qualitative growth. More "chain leader" companies are building new industrial ecosystems through acquisitions. "With the deepening implementation of the 'small and fast' and simplified review procedures, along with an overall improvement in listed company quality, larger-scale M&A deals are likely to emerge," said Tian Lihui. He believes the path for BSE-listed companies to grow through industry chain M&A will become clearer, helping specialized and innovative SMEs evolve from niche "little giants" into industry leaders.