Chinese Private Firms Isolate the U.S in Overseas Expansion
Chinese: Private companies in China are isolating the US in their overseas development – preferring the domestic listing to a US initial public offer (IPO).
A private survey on Tuesday highlighted the US-China trade war’s impact on executive decision-making.
The survey was released when politicians in the U.S were calling for tighter scrutiny over Chinese investment and capital raising. China, on the other hand, was encouraging domestic listing by Chinese companies.
Despite U.S-China trade tensions, CEOs in China remain committed to global expansion. However, they have shifted focus from the U.S to Southeast Asia, Africa, and Europe. The report was according to a joint survey done by China’s prestigious Tsinghua University and Marcum Bernstein, and Pinchik LLP (MarcumBP), a leading auditor for the U.S-listed firms.
More than 66 percent of 1200 business leaders across China see China as the most attractive IPO listing venue. Only 18.7% favor the U.S market. Hong Kong is ahead of the U.S as a preferred IPO destination despite its violent protests.
According to Drew Bernstein, most executives were veering off the United States. Drew is the co-managing partner of MarcumBP.
However, Drew has predicted that the U.S investors’ interest in the fast-growing Chinese tech Unicorns will not diminish. He said many Chinese companies still needed funding from the advanced and liquid U.S capital markets.
“We’re not political people. We’re just business people,” said Bernstein. “The truth is that there’s not a lot of space in business for politics.” Bernstein is also providing advisory services to Chinese companies.
According to the survey, 71% of the Chinese CEOs were willing to consider mergers and acquisitions in their growth strategy. Their most crucial factor in such activities would be acquiring advanced technology.
U.S-China Economic and Security Review Commission (USCC) proposal
Last week, the USCC proposed measures curbing U.S capital movements towards Chinese companies.
The 2019 USCC report to the Congress last week, said that sustained Chinese investment in cutting-edge sectors in the U.S raises concern for the U.S policymakers.
The USCC recommends that Congress enacts legislation to preclude Chinese Companies from issuing securities on the U.S stock exchanges. Especially if their disclosure is inadequate and doesn’t conform to the U.S rules.
Bernstein said there would be steps to improve and ensure the reliability of the financial statements of Chinese companies. He added that this was not necessarily a political move.
