Chinese companies are able to raise far more money through initial public offerings (IPOs) abroad than through domestic IPOs, sources with the China Securities Regulatory Commission (CSRC) said on Friday.

The sources warned that domestic bourses should become more competitive in order to prevent quality domestic firms from being seduced by overseas bourses.

According to a report by the CSRC research center, 48 Chinese companies went public overseas in 2003, raising approximately 7 billion U.S. dollars. The following year, the number of Chinese companies listing abroad nearly doubled to 84 and they raised 11.2 billion U.S. dollars, three times more than they were able to raise on domestic equity markets.

In 2005, 81 companies from the Chinese mainland listed in Hong Kong, Singapore, the United States and Canada, this time garnering around 20 billion U.S. dollars through IPOs, much more than the 10 billion U.S. dollars raised on domestic stock markets in 2003 and 2004.

Last year, IPOs launched by Chinese companies on overseas markets raked in 44 billion U.S. dollars, 2.5 times the amount raised on domestic markets.

The fact that quality companies are attracted by overseas bourses will affect Chinese capital markets, the report says.

If highly profitable, fast growing listed companies are absent, then the Chinese equity markets will be less attractive and slower to expand, the report explains.

If a lot of startup firms go public on overseas bourses, then domestic markets will be affected, and this in turn will make it more difficult for such businesses to list at home, according to the report.

The profits of companies listed abroad are shared by overseas investors, exposing them to mergers and acquisitions by foreign firms.

The report suggests that domestic bourses should restructure themselves and boost their competitiveness. Different types of market are needed for different types of company and the development of China's venture capital market should be accelerated.