ON May 4, the China Securities Regulatory Commission surprised many people by approving the initial public offering of Shanghai-based Yaoji Poker Co, which makes playing cards.

The company wants to raise 362 million yuan (US$55.7 million) by issuing 23.5 million shares on the Small and Medium Enterprise (SME) board in Shenzhen, an exchange that is supposed to provide a funding channel for promising companies with high-growth potential.

According to the prospectus, Yaoji wants to use the money to build a manufacturing base with a designed annual capacity of 600 million decks of card. That would raise the company's annual output to 1.3 billion decks - one for every man, woman and child in China.

Eyebrows were raised for several reasons.

Some critics said a playing card company doesn't reflect the aims of the SME, which is to encourage the development of advanced technology. Others cast a dubious eye at Yaoji itself, saying the company is really more interested in real estate development than in card games.

Still others heaped scorn on the decision because they equate playing cards with gambling and see the IPO as a back-door invitation to the spread of something currently banned as a vice in China.

Of course, playing cards are used in all sorts of games, poker included. And small antes aren't all that uncommon in friendly local neighborhood games. The police seem to take a dim view of gambling only when it involves large sums of money or the involvement of dubious organizations.

All that said, one wonders just how many decks of cards are needed in China.

Last year, Yaoji made 700 million decks. Ningbo Three A Group Co turned out 500 million decks. Zhejiang Wanshengda Industry Co produced 350 million, Zhejiang Bingwang Playing Cards Co and Zhejiang Wuyi Fishing Industry Co each manufactured 300 million, and Jiangsu Santu Economic & Trade Development Group Co, 200 million.

Add them up! In one year alone, 2.35 billion decks of cards were made. Playing cards don't wear out that fast! Yaoji last year had 120 million cards unsold stored in inventory.

Lou Qin, general manager of Zhejiang Bingwang, told China Business News that the playing card market is saturated and there isn't much potential in the export market.

As online entertainment replaces pastimes like card games, especially among the younger generation, you have to wonder who is going to buy all these decks of cards or why Yaoji needs a new and bigger manufacturing facility.

An Internet user whose online name is Zhongzhengying called the approval of Yaoji Poker's IPO "ridiculous," noting that government policy is to foster the development of industries that use advanced technology, seek environmentally friendly solutions or provide needed jobs in sectors that will help China's economy mature.

Other Internet users said they suspect that a listed company like Yaoji will spur underground gambling. Some asked sarcastically: "Will a mah-jong maker be next?"

In a survey on Sina.com, 88 percent of 16,958 respondents said they oppose Yaoji's IPO.

The CSRC, a seven-member panel, didn't see it that way. The problem is that many investors are scratching their heads trying to figure out how the CSRC saw it.

Media reports subsequently revealed that Yao Wenchen, founder of Yaoji Poker, doesn't seem very interested in poker or any card games, for that matter. His full house is real estate.

Yao has two real estate companies in Nantong and Qidong, two small cities in Jiangsu Province, both within an hour's drive of Shanghai.

From 2005 to 2007, Yao's real estate companies bought three sites totaling nearly 760,000 square meters in Qidong for 40 million yuan, or 55 yuan a square meter.

In 2009, the land was valued at 750.16 yuan per square meter, according to Jiangsu's provincial land transaction website.

Yaoji, according to the reports, is planning to spend US$120 million to build a theme park as part of a recreational site that already includes a poker-card theme park, an industrial park, at least 52 villas and a hotel. The whole town will be built at an estimated cost of 4 billion yuan.

Funny how so many of those details were nowhere to be found in Yaoji's prospectus.

"If Yaoji had said it wanted to pour the money into real estate, it would unlikely have gotten the go-ahead on its IPO because the government is trying to crack down on property development," an unidentified industry insider told China Business News.

Using the IPO funds to develop real estate would breach securities laws, the paper added.

The People's Daily, the Communist Party organ and most widely circulated newspaper in China, weighed in on the debate in a rare report. It said many firms like Yaoji Poker are interested only in raising as much money as fast as they can, no matter how they do it.

The stock market has been distorted into a pattern where firms value fund-raising more than long-term investment, which is one reason why the mainland markets are unhealthy places for small investors, the paper pointed out.

The Shanghai Composite Index, which tracks the bigger of the mainland stock exchanges, stood at around 2,100 points 10 years ago. Now, it's hovering around the 3,000 mark despite a decade of double-digit economic growth.

In other emerging markets, like Russia, Brazil and India, market indexes have at least tripled in the past decade.

"It took the United States 100 years to expand its stock market to 800 listed shares. It took Hong Kong 33 years," Zhang Wenzhong, a private mutual fund manager, told the People's Daily. "But here in the mainland, we are running at an unbelievable speed."

China's stock markets set the record for global IPOs last year, with 349 newly listed companies raking in 480 billion yuan from share sales.

But returns for investors aren't going up, up, up. The average price gain for new listings last year shrank to 56 percent from 110 percent in 2009.

Ernst & Young predicts that IPOs will likely set a new record this year, with more than 400 companies set to list to the value of 600 billion yuan.

So is Yaoji just another player in a high-stakes poker game where bluff and bravado matter more than prudence and propriety?

We are waiting for everyone involved to put their cards on the table.