Nanning Baling Technology Co has become the first company in the 20-year history of the Chinese stock market to scrap its initial public offering after the formal launch after failing to draw sufficient interest from institutional investors,the Shanghai Securities News reported.

The small auto ventilator producer, which planned to issue 18.9 million shares on the Shenzhen Stock Exchange to raise about 300 million yuan ($46 million), failed to attract bids from the required 20 institutions during book-building, the report said.

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Other Chinese companies have had their IPOs rejected by regulators or held off from launching because of poor market conditions, but Nanning Baling is the first IPO to be scrapped after being launched, the newspaper said.

"The myth that an IPO could never fail has now been totally busted," the state-run newspaper said in a front-page article, adding that it was a healthy development for the stock market.

The failure comes after an increasing number of new listings have fallen below their IPO price on their trading debuts, partly because of lingering market weakness amid concern over an official campaign to clamp down on asset prices and monetary tightening steps to fight inflation.

In the latest example of a major IPO falling flat, shares of car dealer Pangda Automobile Trade Co Ltd, which raised nearly $1 billion, fell 23 percent on their April debut.

The benchmark Shanghai Composite Index has fallen more than 2 percent so far this year in the wake of a 14 percent drop in 2010 that made it the world's worst performing major stock index last year.

In recent years, the China Securities Regulatory Commission has introduced a slew of reforms aimed at clamping down on excessive speculation that has resulted in huge gains in the debut share prices of many companies.

The reforms include a rule that a company must have a minimum number of institutions bid for its shares in the book-building process in order to complete an IPO.

Previously, it was common for some IPO share prices to double or even triple on their first day of trading, only to fall thereafter, creating lingering market instability and distorting the valuations of newcomers and the overall market.