Back in 2009, China established a Nasdaq-style market board for start-ups, the Growth Enterprise Market or GEM.

After a honeymoon period of enthusiastic trade, investors soon became aware of the many risks when it comes to these baby businesses. As the mood turned, prices on the market also began their slide.

Chinese investors are waking up from their Nasdaq dream. China's very own Nasdaq-style market, the Growth Enterprise Market, has failed to build a golden era for local business startups.

But flash back to three years earlier, when investors were much more ambitious, hoping to make a fortune from those fast growing enterprises.

The bright market sentiment drove a stream of smaller firms in the game. But with the capital boom in the market, risk issues have started to haunt investors.

Mao Zhenhua, dean of economic research at Renmin University of China, said, "After the growth enterprise market board opened, there have been many problems, like financial fraud among listed companies, and the selloffs by big shareholders, or some companies even abusing the raised money. All this drives investors' trust away."

Market watchers say, there are three main problems among the listed enterprises in their growth stage, the very expensive IPO stock prices, the too high PE ratios, and the big bubble created by irrational investors.

Some analysts say, China's very own Nasdaq-style mechanism was not regulated enough since the beginning. And now, they say, the market needs a complete overhaul and new regulations to revive, and to find the balance between yields and risks when investing into new businesses.