CRI: Overseas Listed Chinese Companies to Face More Challenges in 2013

Chinese companies face a number of obstacles when they move onto the world stage. A panel of experts at the ongoing China Entrepreneurs-CEO and CFO Forum in Beijing has examined the current uncertainties of expansion as Chinese companies seek to go global, and offered advice to overcome those challenges. CRI's Stuart Wiggin has more.

Gene Buttrill, a lawyer specializing in capital markets, said at the forum that he believed more Chinese companies would delist from the U.S. market next year after failing to show any signs of improvement in their performance.

"They are considering two things: One would be if the environment in the U.S. gets better. Two, they really think they can re-list in Hong Kong, because most of these companies, they have still private equity investors or they have other investors that need assets, and they need the capital from the markets in order to grow their business."

Following the recent U.S. recession, international markets and investors are demanding greater disclosure of a company's financial reports. But Chinese companies usually do not disclose much information about their operations to investors. Xiao Li, an audit partner in the Capital Markets Group at KPMG China, one of the Big Four audit firms in the world, explains.

"A lot of problems are about communication. The U.S. market is a capital market, a disclosure-based market. All investor decisions are based on open and transparent disclosure. I'm not saying what our Chinese companies do is not open and transparent, but we can do better. We know what we are doing within the company, but we need to have the investors know what we are doing in real time."

Another obstacle is the amount of time needed to build a brand's global reach and recognition in the minds of non-Chinese consumers.

Robert Koepp, Senior Vice President of Integrated Corporate Relations Inc., a leading U.S. financial communications firm specializing in investor relations, says Chinese companies that go global also face communication challenges when it comes to Sino-American business relations. He cites Chinese technology giant Huawei as an example.

Huawai has become the latest high-profile symbol of China Inc.'s frustrated efforts to fully globalize, especially in the U.S. marketplace. Although it has contributed greatly to U.S. economic development, a deficit in trust remains.

Koepp attributes this to missteps in the company's communications strategy, and offers some advice.

Robert Koepp, Senior Vice President of ICR Inc

"Huawai should seek proper ways to consult with the U.S. government in a constructive manner in order to further its business development there. Or, it may also learn from Japan's Sony Corporation to make its voice more often heard through the American local media."

During the panel discussion, Carl Yeung, CFO of Sky-mobi, said there were many conversations about Chinese companies delisting. Yet, he remains optimistic about Chinese firms listing in the U.S.

"There is a very strong interest in going to the U.S. At some point, for U.S. investors, they are really still interested in the growth and opportunities of Chinese companies listing in the U.S. These companies are offering a parallel sort of growth and opportunities. [They] may not be able to show certain types of working papers [and] disclose a little bit. Once we pass this learning process, I think we are going to see the market go forward."

The forum, which began Tuesday and ends Wednesday, also covers business innovation as well as new patterns in competition among enterprises as they compete among themselves with their products and services.

 

From: CRI

Updated: 2012-12-12 19:44:07