THE COMING RESURGENCE OF CHINESE IPOS

Until the financial crisis, the most robust part of the going public market in the United States was for China-based companies. That crisis, and the series of scandals regarding Chinese accounting practices, led to a virtual disappearance of this market. Indications are that the Chinese reverse merger and IPO boom is coming back with a vengeance.

There are a number of factors for this. First, China’s growing consumer market has produced an incredible number of profitable, growing Chinese companies servicing the domestic market. Currently, going public in China’s own stock markets is subject to an almost decade-long waiting list. Made his companies do not need capital, but have seen that going public is the best way for founders to build wealth.

A second factor which cannot be just discounted is that the United States still retains the almost mythical admiration of the Chinese people. Indeed, the Chinese word for ”America” is”beautiful land.” Chinese consumers believe that American products are of better quality, and, with respect to health, beauty and food products, healthier. A number of Chinese companies in the consumer products, food, and health products are eager to establish themselves as the US public company in order to validate their products to the Chinese consumer.

So, a number of middle-market Chinese companies are tiptoeing themselves into the US IPO market. We can expect that in 2017 there will start to be the beginnings of another boom in Chinese public merger transactions