How Chinese Companies Can Effectively Access Capital and Build Credibility with Investors in U.S., The World’s Largest Market
To fully access the world’s largest and most diversified pool of investors, a company should arguably be listed on a major U.S. stock exchange. Yet by itself, a U.S. listing will not necessarily be sufficient to attract and retain U.S. investors as long-term shareholders. And when a company is based in China, this is even more challenging as there are unique hurdles when communicating with U.S. investors, including differences in time zone, language, culture, and certain business practices. Fortunately, with commitment and persistence, these hurdles are surmountable.
The First Step: Entering the Public Markets
A Chinese company looking to grow and diversify its business stands to benefit greatly by entering the public market. In short, accessing additional capital can help a company innovate, create jobs, grow its business and spur economic growth in its home market.
Selection of that market is an important choice as the company will benefit from the protections and reputational brand that comes with that U.S. market. It is often said that “it is the company that you keep” and clearly being a member of a global world class marketplace is an important consideration. Listing in the US is often viewed as the “gold standard” and demonstrates that the company has met the highest of listing and disclosure standards. The NYSE has been encouraging Chinese companies to either consider the U.S. as their primary listing venue or to complement a local listing with a secondary listing in the U.S., either way enabling them to tap into the world’s deepest pool of liquidity and the NYSE’s global visibility platform. A Chinese company should also carefully select its outside advisors as part of this entrance. Experienced legal, accounting, banking and communications advisors will become key members of a company’s team.