Today, with the rapid development of the world trade economy, the number of Chinese companies listed overseas is getting larger and larger, and they are all well-known companies, such as Alibaba, Vipshop, NetEase, Sina, Ctrip and so on. So what are the benefits of overseas listings for Chinese companies?
first. What are the advantages of overseas listing of Chinese companies?
1. Low-cost financing to rapidly improve the competitiveness of enterprises;
2. Improve the corporate governance structure and modern enterprise system;
3. Learn foreign advanced technology and management experience;
4. Improve the image of the company in the international capital market;
5. The listing process is simple and effective, and the financing plan can be completed in a relatively short period of time.
In addition to the other advantages, issuing stocks in foreign securities markets, shareholders are scattered, issuers can use the funds raised more freely, reducing the risk of enterprises being controlled by new shareholders. Issuing stocks in foreign securities markets can raise funds in various currencies and meet the demand for foreign exchange funds.
Second, which companies are suitable for this listing method
The first category is the enterprises that have encountered obstacles in the domestic listing and cannot be listed. For example, the business history of the enterprise is less than three years, the scale of assets of the enterprise, and the business performance of the enterprise do not meet the requirements for domestic listing, and so on.
The second category is the companies that cannot wait to get listed in the domestic market. Because of the domestic listing, generally speaking, there are 400 to 500 companies queuing up each year for approval for listing. If the company urgently needs financing and cannot wait in line, it can also choose to list overseas.
The third category is enterprises whose markets and products are located overseas. These enterprises need to open up markets overseas, expand customer resources, further establish their own brands, and can also go public overseas.
The fourth category is the enterprises that implement the national "going out" strategy. Such enterprises need to go abroad to develop resources and integrate resources, including the acquisition of enterprises, acquisition of natural resources such as mineral resources, establishment of research and development institutions, etc., to develop overseas, or to list overseas.
third. Policy restrictions on foreign investment by Chinese enterprises
First: Chinese companies’ foreign investment needs the approval of the foreign exchange management department. Although the approval policy for direct investment has been relaxed, there are still many restrictions, and financial investment is strictly managed;
Second: Chinese enterprises' foreign investment projects need to be approved by the development and reform department, and there are great uncertainties in terms of time and approval. These two restrictions to some extent hinder Chinese companies from seeking investment opportunities abroad. Furthermore, a large number of private enterprises and small and medium-sized enterprises in China have the problem of financing difficulties: it is difficult for banks to obtain loans, it is even more difficult to go public, and it is even more difficult to issue bonds. Enterprises have financing needs, but many policy restrictions have become obstacles.
However, if the head of the company applies and establishes through the identity of a third country, it can avoid the restrictions of these policies. Compared with domestic and overseas listing, foreign-invested enterprises have more choices. There are various financing channels abroad to make up for the financial pressure. Overseas listing can Accelerate corporate financing, expand foreign capital sources, and reduce costs.
To sum up, we can understand that the foreign securities market has a wide range of sources of funds, and stocks are easy to issue, especially when domestic financial tightening measures are adopted, such issuance is very necessary. Refinancing after overseas listing is more flexible and less difficult, while the refinancing cost of domestic listed companies is relatively high and difficult.