The IPO and Listing of Foreign Companies in China

Chapter 10 looks at the listing of foreign companies in China, which is the other side of the coin of cross-border listings. This chapter critically examines the development and regulation of the initial public offering (IPO) and listing of foreign companies in China, and based on such examination, make suggestions for improvement. Since 2018, China has launched a pilot program to allow the listing of “Red-chip Companies,” which are established by Chinese people in offshore financial centers and are technically foreign companies. The Chinese regime for regulating foreign listings has similarities and differences with those in the US and Hong Kong, both of which have developed capital markets and are top destinations for Chinese companies to get listed overseas. This chapter argues that China should follow the Hong Kong model to grant preferential treatments only to those cross-listed in China, and also learn from the US experience with American Depositary Receipts to enhance the utility of Chinese Depository Receipts.