Why did Chinese companies go public in the United States and were not ＂scared＂?

Author: Dong Shaopeng

Although the U.S. government threatened the double audit of Chinese listed companies in the United States, claiming that Chinese companies that did not meet the requirements of the US regulatory regulatory would be delisted by the end of 2021, from the latest statistics, Chinese companies were not scared.Since the beginning of this year, the financing amount of Chinese companies' IPOs (first public sales) has reached US $ 5.23 billion (S $ 7.1 billion), which is more than double the same period last year.So, why can't Washington's threatening pressure still can't stop Chinese companies going to the United States?

First of all, the United States attempts to set up institutional obstacles for Chinese companies to go public in the United States or Chinese stocks, which is not in line with the law of free flow of market resources.

We must figure out what the United States says must abide by the relevant audit rules of the US listed company, otherwise it will mean that it will be delisted.At present, Chinese stocks are in line with the US securities market rules, otherwise it is impossible to list in the United States.Therefore, they should also be in line with the US securities market audit rules.So why did the US government say that it might not be compliant?

The reason is that there are some different arrangements for audit supervision between China and the United States.According to U.S. law, the listing of Chinese companies in the United States must provide underwriting and audit services by investment banks and accounting firms registered in the United States.From the perspective of actual practicing, the audit services currently providing audit services for China Stocks are PwC, Deloitte, KPMV, and Ernst & Young registered in China.In line with US audit rules.

However, in accordance with Chinese regulations and regulatory frameworks, the United States cannot directly obtain audit drafts on Chinese companies from these institutions, but must be obtained through the regulatory cooperation mechanism in China and the United States.The United States cannot directly put these audit drafts in their hands, so it is necessary to let American local accounting firms engage in the so -called secondary audit.

The author believes that these so -called new measures in the United States are not targeting the quality of listed companies, but the long -arms jurisdiction and cooperation supervision disputes in the past long for a long time, and have attached political factors.Of course, this will bring some obstacles to the listing of Chinese companies in the United States, but the impact is limited.

Second, the general trend of the opening and development of capital markets in various countries is difficult to reverse, and Chinese companies can still choose to go public in the United States according to their own needs.

The listing of Chinese companies in the US securities market is a concrete actions that follow market rules and their legal rules. Among them, they not only involve financing, but also make the rapid development of China's economy to more conveniently distribute the global securities market to the world.Listing in the United States not only realizes the demands of brand communication, financial and financial communication, and market expansion, but also bring high growth investment targets to investors in the United States and all over the world. It is essentially a win -win situation.

Facing the threat of the US government's delisting but continuing to choose to go public in the United States is still a natural choice based on its own development needs.Most of them set up a listing structure in the United States in the early days, signed agreements with relevant investment banks and accounting firms, and even entered the listing of listing.If the listing is changed, the operating cost may increase significantly.In addition, this also reflects these companies' trust in the market mechanism, and reflects the expectations of the US Stock Exchange in the pressure under pressure.Those who are insightful to defend and follow the market principles, especially the securities market supervision authorities, should really cherish the rationality of Chinese companies.

Third, go public in the United States in a more severe atmosphere will also force relevant Chinese enterprises to improve the awareness of the law and regulations, and improve the ability to carry out fair competition in a global environment.In this sense, the United States may also have some use in pressure on Chinese stocks.Of course, fundamentally, what is really conducive to the interests of Chinese companies in the United States and the US market is that China and the United States can continue to strengthen securities regulatory cooperation and abandon unilateralism and pan -political practices.

There are very few scandals such as fraud in Chinese stocks, which is also a market problem.All listed companies in the United States have undergone the review procedures set by US laws in advance, without exception.Regarding the issue of the listing process, the companies involved and their professional service agencies, as well as the US regulatory authorities and exchanges, should reflect, and should bear some responsibility.

In the era of economic globalization, one -country enterprise to carry out business or listing financing in another country should abide by the relevant laws and rules of the two countries at the same time.Both regulators are responsible for implementing effective supervision of listed companies and professional service agencies to effectively protect the legitimate rights and interests of investors.Only strengthening supervision and cooperation between China and the United States can solve problems and achieve effective supervision and win -win situations.Taken the opportunity to generalize market issues, which is not only incompetent, but will form more disaster.

In the past, practice proved that the number of cooperations in the field of audit supervision of cross -border listed companies in China and the United States in the field of audit and supervision of cross -border listed companies is beneficial to bilateral cooperation.The United States should abandon long -arms jurisdiction, and in accordance with the ideas of cooperative supervision, solve mutual differences through negotiation and negotiations, and do a good job of institutional connection.

Unilateralism and protectionism promoted by the United States have brought great damage to global economic and trade and financial cooperation.Now some politicians have tried to spread it to the regulatory field of the securities market, which is likely to cause the tendency of market problems to increase the tendency to exacerbate, and it constitutes a reverse application of the principle of freedom and fairness in the market.