The Chinese are picking up their marbles and going home. A few years ago, Chinese companies ran to the US and entered the US market and exchanges. Now, just a few years later, they are leaving and going home. There are a number of reasons why, but US regulation and required regular documentation are factors.
China was once a communist state. Now it has evolved into a nation based on state capitalism. In past times it would be called fascism—another form of state capitalism.
Yahoo Financial News has the story.
Chinese firms leave US stock markets amid complaints about price, accounting scrutiny
By Joe Mcdonald, AP Business Writer | Associated Press
BEIJING (AP) — Just a few years after Chinese companies lined up to sell shares on Wall Street, a growing number are reversing course and pulling out of U.S. exchanges.
This week, Focus Media Holding Ltd., announced its chairman and private equity firms want to buy back its U.S.-traded shares and take the Shanghai-based advertising company private. The deal would value Focus Media at $3.5 billion, according to financial information firm Dealogic.
Smaller companies also are withdrawing from U.S. exchanges. In a sign of official encouragement, a Chinese business magazine said a state bank has provided $1 billion in loans to help companies with listings abroad move them to domestic exchanges.
The withdrawals follow accusations of improper accounting by some companies and a deadlock between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors.
Some Chinese companies say they are pulling out of U.S. markets because a low share price fails to reflect the strength of their business. Withdrawing also eliminates the cost of complying with American financial reporting rules.
Focus Media “has been seriously undervalued on U.S. stock markets” and being taken private will help to promote its “long-term strategic development,” said a company spokeswoman, Lu Jing.
U.S.-traded Chinese companies faced scrutiny after auditors for several quit and others were accused of accounting irregularities. Concerns about company finances have caused share prices to tumble, costing investors several billion dollars.
“Probably all these companies have some questionable accounting, so they may prefer to move out of the U.S., not to come under too much scrutiny,” said Marc Faber, managing director of Hong Kong fund management company Marc Faber Ltd.
Some analysts compare the current Chinese companies with the Robber Barons of the 19th Century like Carnegie, Astor, Rockefeller, Gould, Morgan and many others. The Chinese, as far as treatment of their employees, are still in the 19th Century. That cheap labor enables them to compete.
How long they will last is another question and there are already rumbles that the Chinese workers are about to turn and demand the same treatment as other workers around the work. It would be ironic that for a formerly communist nation to be beset with strikes and the formation of non-state unions.
Perhaps we should abolish unions here in the US and send them to China. That’d stop Chinese progress for another hundred years.