Thursday 16 May 2013

Key insights into Chinese London listings

Today we hosted a China Advisor lunch in our London office to discuss the City’s reception to Chinese business and how it could be improved in the future. The idea for the event came about at the beginning of the year when one of our Chinese clients Camkids plc, based in Fujian province, received a spontaneous round of applause at the end of its presentation to a group of private client investment managers. The audience was clearly impressed to see this Chinese business performing ahead of expectations and the share price enjoying a healthy climb since its first day of dealing on AIM. We know that other Chinese companies do not always experience the same positive reception in London and were keen to find out what could be done to improve the situation.

The lunch was co-hosted by John McLean who has been involved in China since the late nineties and has significant experience as a UK Director of a number of Chinese businesses. He is also a Board member of the China-Britain Business Council and Chairman of VSO China. 24 China advisors and key influencers attended what was the first ever gathering of its kind in the City to address the specific issues of lack of institutional appetite, actions the City could take, and what Chinese companies wishing to list in London should do. Some guests gave short speeches which encouraged the debate; these included an analyst viewpoint of recent Asia deals, the LSE’s strategy towards China and institutional attitudes to Chinese business. Our office was transformed into a beautiful Chinese influenced dining space.

To get a better understanding of the City's opinions of Chinese business, we sent out a brief survey with the invitees asking three questions:
  • Why is the investment community often reluctant about investing in Chinese business?
  • What actions could be taken in London to improve this situation?
  • What actions should a Chinese company consider to make a successful London listing?
We received a lot of very insightful responses and are currently undertaking a keyword analysis to determine the findings of the survey.

However, a snapshot analysis has given some interesting insights. The top reason given for the reluctance to invest was poor market performance, with corporate governance issues being a close second. Respondents to the survey thought that the best action London could take to improve the situation was better market/ City education for Chinese businesses, and the top-line action a Chinese company should consider before a London listing is to appoint English speaking Directors to the Board. While it is already a requirement to have at least one English speaking Director, it shows that the Chinese businesses may not be communicating their updates effectively enough.

We thoroughly enjoyed hosting the event and engaging in some challenging and thought provoking discussions; judging by the feedback that we have already received the guests had a great time and learnt a lot too. We look forward to hosting more events similar to this in the future.

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