Betting on China : Chinese Stocks, American Stock Markets, and the Wagers on a New Dynamic in Global Capitalism

The promise and perils of Chinese stocks in American stock markets Betting on China takes readers on an illuminating journey into the often confusing and poorly understood world of Chinese stock issuances in America. With insightful qualitative and quantitative analysis, it looks at the phenomenon of equity and capital exchanged between the world's two largest economies and the implications for global finance. Written in an accessible narrative style and amply supported by hard data, the book examines the context and underpinnings of the Sino-American equity relationship, revealing its core dynamics through real-world case studies that range from the precedent-setting blockbuster IPO of China Mobile to the near breakdown of the U.S.-China equity exchange mechanism brought about by short seller attacks on Chinese concept stocks. Combining an insider's eye with an outsider's objectivity, American born author and Beijing-based consultant Robert Koepp explores the reasons and the means by which China, America, and the global economy reap enormous gains from the process of Chinese companies issuing equity shares on U.S. stock markets. Betting on China exposes the complexities and nuances of a vital but underappreciated pillar of modern international finance and offers a window into China's role as a dominant but still modernizing economic superpower. Analyzes on a macro- and microscale the forces that move Chinese companies to raise capital on NASDAQ and the New York Stock Exchange and what this means for the world at large Explores the real stories behind why and how China-based enterprises develop as public companies listed in the United States—and why government regulations need to work in support of and not against this force of market nature Shows that the "betting" on China that occurs through the U.S. equity market exchanges is critical for getting an accurate picture of China's position and prospects in our interactively connected global economy Detailed but accessible, Betting on China is essential reading for global finance professionals, policymakers and regulators, students of finance, people doing business in China, and anyone curious about China's place in—and impact on—the global economy today and in the years to come. Intro -- Betting on China: Chinese Stocks, American Stock Markets, and the Wagers on a New Dynamic in Global Capitalism -- Contents -- Acknowledgments -- Preface -- Chapter 1 Wagers of the Dance: China, America, and the Interplay of Public Equity -- A Hierarchy of Financial Footwork -- IPOs for Cash-out and Cash-in -- A Ground-Level View -- U.S. China Issuances Measuring Up -- Chapter 2 Realities, Theories, and Gung Ho: The Ying and Yang of Chinese Issuances -- The China Wave -- Big-Stakes Games -- Ying-Yang IPOs -- Market Détente -- Breaking Molds -- Adam Smith's China Bet -- Gains, Rules, and Risks -- Information versus Noise -- Real "Gung Ho"--Chapter 3 China Mobile: The Big Bet -- First Dish in an IPO Banquet -- Birth in a Maelstrom -- Ripple Effects -- Assimilating Global Standards -- Of Men and Governance -- Red Chip Scare -- Spillover Effects -- Quantity, Banditry, and Quality -- New Generations, New Markets -- Nothing and Everything -- Chapter 4 Spreadtrum Communications: When the Chips Are Down -- Stirring the Waters -- The Basic Spreadtrum Story -- Leading a New Chinese Industry -- Pulling Back from the Brink -- Shortsighted Shorting -- Chapter 5 Calling the Bluff: Truths, Fictions, and CRMs -- Initial Misgivings -- In Through the Back Door -- Dawn of the CRM Dread -- A Short Love Affair for CRMs -- Unaccountable Accounting -- The Din of CRM Noise -- A Reversal for RM Overhype -- Chapter 6 Longtop Financial: The Costs of Dirty Dealing -- The Longtop Shocker -- A Fallen Icon -- Deception's Depths -- A China Problem? -- New Stakes in the Game -- The SEC's Big Bet -- Upping the Ante -- Beyond the Brink? -- Chapter 7 Continuing the Bet: Accountability and Adaptability -- Evolving Accountability -- The Adaptability Challenge -- Appendix -- Notes -- About the Author -- Index A timely and controversial discussion of the way that China's emerging business financing structures are outperforming those in the West The phrase "Made in China" is ubiquitous, and China's status as a consumer of everything from natural resources to advanced technology is well established, but how did it get there? Looking at the financial drivers of the country's phenomenal growth, in particular, the high-risk venture capital and private equity finance currently feeding the entrepreneurship and innovation that is positioning China at the forefront of tomorrow's industries, Funded in China sheds much needed light on the poorly understood, often disregarded subject of how China became a global power. One of the hottest topics in global finance, China's meteoric rise from producer to consumer presents a fascinating opportunity for reexamining Western business financing models. The book looks at how the Chinese approach to financing new enterprises is changing the shape of development, not only in the world's fastest growing economy, but around the world. Written by a leading business and finance consultant based in Beijing, Funded in China explores these and other crucial questions, providing compelling, often provocative answers. @*Presents a timely, often controversial discussion of the ways China's emerging financing models are outperforming the West and what this means for the future@*Focuses on three types of related forms of high-risk equity finance currently in play in China: angel investment, venture capital, and private equity@*Features many real-world case studies from which the author draws powerful lessons for business leaders, institutional investors, and venture capitalists .

Praise for Betting on China

"Based on his deep understanding acquired through years of experience in China, Rob Koepp provides remarkably keen observations in Betting on China. Through this book, China's role in the U.S. capital markets and its position in the global economy can be seen in a new and refreshingly informative light."
—Eddie Wang, former President of China Minsheng Banking Corp., Ltd.

"Rob Koepp's book is an entertaining and well written romp through the new Wild West of US listed Chinese companies. But it is also a nuanced look at the costs and benefits to both countries of continued interaction at corporate and capital market levels and highlights the challenges facing public oversight bodies on both sides of the Pacific. At the time of the book's publication both Chinese and U.S. regulators are undertaking reviews that could threaten the nascent, cross-border, public equity market relationship, and Koepp's book illustrates the concerns and approaches of each side. This is well worth a read whether you are a student of capital markets or just someone trying to understand the risks and benefits of 'betting on China.'"
—Ian Charles Stewart, Co-founder of Wired magazine, venture philanthropist, and Beijing resident

"Betting on China is a valuable contribution to the debate about the country's role in the global economy and international capital markets."
—Alexandra Harney, author of The China Price: The True Cost of Chinese Competitive Advantage

China operates as the planet's second largest economy and its fastest growing economic superpower. "Betting on China" suggests a new prism through which to view China's rise, present-day workings, and future prospects in the global economy: stocks; more specifically: the stocks of China-operating companies that are listed on the major U.S. stock markets of NASDAQ and the New York Stock Exchange. It is through the mechanics of the bets placed on Chinese companies in these equity exchanges-the largest and most liquid in the world and open to investors across the planet-that real insight into the workings of China and of its economy are generated and played out in real time