The founder of New York Global Group, Benjamin Wey, has been at the center of bringing a number of Chinese companies public.
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Last year, I raised some concerns about the proliferation of fraud associated with Chinese companies that had gone public through reverse mergers with public companies here in the United States.
FORBES: FBI Ramping Up Interest in Fraud Related To Chinese Reverse Mergers
Chinese companies are now also working with public North American and European companies to develop oil and gas fields.
The burst in new issues was not primarily a result of fortunate proximity to the liberalizing Chinese economy and its new public companies.
The window is nearly shut for Chinese companies to go public in the U.S. while shares of listed Chinese stocks on NASDAQ and the NYSE are bottoming out.
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Or how about Ruby Lu of DCM, who funded three Chinese companies that went public in the U.S.: Amazon-plus Dangdang, car web site BitAuto and outsourcing firm VanceInfo.
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But recently, two larger Chinese companies, who went public in the United States via more traditional IPO methods and with the help of more prestigious investment bankers, have also been accused of fraud by short sellers.
Transparency is a new concept for Chinese companies, especially for state-owned enterprises and state-controlled public companies, whose top executives are usually appointed by the government.
In recent years, the Chinese government has banned tobacco companies from public advertising and from sponsoring sports and cultural events.
Investment returns in China startups have far outperformed those in India, and many more young Chinese companies are set to go public this year.
Many Chinese management teams that are taking their companies public in China or in overseas capital markets do not understand what is required to run a publicly listed company.
Qiming Ventures has five Chinese portfolio companies in the cue to go public soon: ramped up car rental service eHi from Shanghai, dating site Jiayuan, online video programming PPLive, social networking service Kaixin001 and kids entertainment site Taomee.
Now the CEO and chairman of Proteus Capital, he does "reverse takeovers, " offering U.S.-based shell companies to Chinese firms seeking an expedited public listing on American exchanges.
Shares of Chinese Internet and mobile companies on NASDAQ and the NYSE have drooped, and the last Chinese startup to go public in the U.S. was 8 months ago flash sales operator VIPShop, lead invested in by DCM partner and SINA co-founder Hurst Lin.
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Last year, there were several Chinese-based companies who had previously chosen to go public in the United States via a process called a reverse take-over (RTO), who were accused of fraud.
Chinese companies were first allowed to sell shares to the public just 20 years ago, compared with the centuries that Western stock markets have had to develop.
Chinese companies have compounded the damage by being overly conservative in their public communications.
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Half those qualify as Chinese companies backed by U.S. venture capital funds that went public on U.S. exchanges, according to data released by the National Venture Capital Association (NVCA).
The pork soup scandal, as it has been dubbed, hits the trifecta of Chinese mistrust of government: lack of a plan to protect the public interest instead of companies and officials, political corruption that fails to hold polluters accountable, and withholding timely information when disaster strikes.
But now, if public discourse on China is all hell-fire, fear and anger, Chinese companies will think twice about investing in the U.S., and Chinese shoppers will think twice about spending their money there.
My own recent experiences with Chinese companies have forced me to add an additional reason: sending kids to United States public elementary schools.
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As Light in the Box moves toward going public in the U.S. at a time when few venture-backed Chinese companies are getting out of the gate, it helps to have a strategy that Wall Street can grasp.
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Because the banks' flotations would be the country's most prominent and ambitious yet, any corruption unearthed once they are public would damage investor confidence badly not just in the banks, but in other Chinese companies too.
The next step will be to take Light in the Box public and in that goal he joins a long cue of founders of venture-funded Chinese companies.
FORBES: Beijing Startup Builds On Shoulders Of Giants To Go Global And IPO From China
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