Internet firms still keen on US IPOs
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China's Internet industry will see more companies float IPOs in the US, and the trend is expected to continue, as the industry maintains its record of strong growth, analysts said Monday.
"It is not that easy for Internet companies to go public domestically, since authorities with the nation's securities industry have a very strict assessment process," said Li Weidong, an Internet industry analyst with Chinaventure, a Beijing-based research and consulting institute.
And some newborn Chinese Internet companies may have fallen short of the standards.
"Chinese Internet companies are usually not financially strong enough to meet the authorities' standards, for example, in terms of net assets," Li said.
However, some companies that have had a hard time getting into the Chinese stock market are being welcomed in the US.
"What the US stock market emphasizes is the company's potential, so even if the company is currently reporting a deficit, it can still get into the US securities market as long as the company demonstrates a big potential in the long run," Li said.
Tudou Holdings Limited (Tudou.com), a China-based, online video-sharing site, filed a registration statement this month with the US Securities and Exchange Commission (SEC) for an initial public offering, is aiming to raise $120 million.
Other Internet companies, including online video website Youku and online retailer Dangdang, are also seeking opportunities to go public in the US.
Successes this year include online real estate marketing website SouFun.com and online clothing and accessories retailer MecoxLane, both of which successfully listed in the US.
So far, Internet companies with listings in the US have performed well.
However, analysts warn that Chinese companies listed on the US stock market still face great challenges.
"Some Chinese companies tend to hype themselves up too much in order to look better, especially in terms of their financial report," said Feng Lin, an analyst with the China e-Business Research Center.
"However, that practice is not feasible in the US stock market, which has far stricter regulations.
"The stock market is more mature in the US. And companies in the US are being watched by the whole of society, not only the SEC.
Supervision from investors, auditing companies and the media all create a higher standard for domestic companies."
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