The Research Of Motivation, Current Situation, And Countermeasure Of Chinese Small And Medium-sized Enterprises Listing Overseas

The small and medium-sized enterprises (SMEs) have played animportant role in China economic development. Unfortunately, thefinancing channels of SMEs are not satisfied, and the SMEs have turnedto list in overseas market to finance because the SMEs were hard tofinance through commercial banks as well as list in the A stock market.Overseas listings of Chinese SMEs have reached peak in2010, butsuffered winter in2011and2012because a lot of Chinese SMEs wereshort sold in2011which result in delisting or going private. The thesisstudied the motivation and current situation of the Chinese overseaslisting companies, and analyzed the factors which affected the overseaslisting to give some useful advice to the pre-IPO companies and to reducethe risk after listed.The thesis is divided into six parts. The first part is the summarizationwhich introduces the characteristic of the Chinese SMEs and thedevelopment and trend of overseas listing. The second part analyzes themotivation of the Chinese SMEs overseas listing. The third part studies the market performance after listing of the SMEs and analyzes thereasons of delisting in2011. This part includes the cases analysis of thefinancial fraud of the Chinese stocks listed overseas. The fourth partsummarizes the factors that influence the companies listed overseas togive the suggestion to the pre-IPO SMEs. The fifth part provides thesolution to the SMEs list overseas. The sixth part is the summary of thethesis.The SMEs listed overseas has mainly experienced four stages. Thefirst stage which before1990is in form that the Chinese companiesinjected capital to acquire the foreign companies During the year1990to1992, as the representative of CITIC Pacific, Sino-foreign joint ventureenterprises began to list directly. Since the second half of1992, domesticenterprises had listed in the overseas stock markets by IPO and Reversemerger. Tsingtao Beer had been the first company listed in HKEx. Afteryear2000, a lot of Chinese companies listed successfully in the overseasmarket which distributed in different industries and markets that not onlyin Hong Kong but also in America, Singapore and etc. Due to thetightening control of domestic IPO, it is expected that the overseasmarkets will be the choice of many SMEs.Financing, strategy development and internal governanceimprovement are the main reasons of the SMEs listing overseas. Thefinancing channels of SMEs in China are not so satisfied that the overseasmarket is a good choice for the SMEs. With China’s accession to WTO,Chinese and foreign trades are more and more frequent. Some companieschose to go public in the overseas markets in order to expand the overseasmarket and improve the international reputation. Most SMEs areprivate-owned which are weak of internal governance before listing.Companies can improve governance to meet the international corporate governance requirements by overseas listing which will encourage thecompanies to develop well.The majority of SMEs had enjoyed high first day returns of IPO inrecent years, but after going public, the market performance was not aswell as the first day returns, what’s more, the secondary market returnwas negative recently. In2011, a lot of Chinese companies suffereddelisting in American market, and the main reason is that some Chinesecompanies were disclosed financial fraud. After analyzing, we found thatsome SMEs really had whitewashed the financial reports. Thisphenomenon not only affected the companies’ images, but also the futurefinancing channels, and even affected other Chinese companies listed inAmerica.SMEs should think more before making the decision to list overseaswhich including consider the financial requirement, market preferencesand the organization structure that needed, and find the reliable financialservice agencies. Both the internal and the external of the companiesshould actively promote the overseas listing process, and help thecompanies to go public successfully in the overseas market. After listing,the companies need to keep good relationship with the investors andmedia to establish the good image to cope with the potential risk.