Chinese firms turn to Switzerland for capital amid US crackdown

Employees work at a SANY Heavy Industry Co factory in Changsha, capital of central China’s Hunan Province. Photo: CI

As the United States consistently pushes for so-called financial decoupling from China, Chinese companies have turned to new overseas markets such as Switzerland to expand capital funding channels.

Experts said the rapid growth of these capital markets will soon make the United States realize that they are not irreplaceable, while urging the United States to correct its mistakes and create a fair and predictable trading environment for Chinese companies.

On Thursday, at least 10 Chinese companies announced that they would be listed on the SIX Swiss Exchange by issuing Global Depositary Receipts (GDRs). The companies include Shanghai-based Will Semiconductor Co, Shenzhen-based Eastroc Beverage, multinational heavy equipment company Sany Heavy Industry Co and medical equipment maker Lepu Medical Technology.

Typically, these companies hope to expand international capital-raising channels by issuing GDS overseas to meet the needs of their international business while boosting global brand recognition, according to their statements.

GDRs are negotiable certificates issued to represent the underlying shares of a foreign company and traded on a local stock exchange.

By registering in Switzerland, Will Semiconductor aims to increase its international recognition, strengthen strategic cooperation with its global customers and suppliers, and increase its international research and development capacity, the company said in a statement on Wednesday.

“As a leading global financial center, Switzerland’s financial environment and capital market rules are relatively mature, with a higher degree of openness and fairness. This makes it attractive for foreign companies “, Dong Dengxin, director of the Finance and Securities Institute of Wuhan University of Science and Technology, told the Global Times.

Compared to launching IPOs in foreign markets, the cost of issuing GDRs is lower because the process is mature and the fact that the issuer is already listed on the A-share market facilitates the approval of GDRs. its GDRs in overseas markets, Dong said.
He added that allowing companies listed on the A-share market to issue GDRs overseas is a crucial part of China’s capital market reform, which will further open up domestic markets, while helping to build a strong reputation for domestic companies in global financial markets.

The recent wave of RDA issuances came as the China Securities Regulatory Commission revised the provisions of the Stock Connect program between domestic and foreign stock exchanges in February this year to expand its scope to include the Shenzhen Stock Exchange, as well as stock exchanges in Switzerland and Germany.

Previously, only companies listed on the Shanghai and London stock exchanges could participate in Stock Connect.

“Supported by China’s stable economic growth, high-quality A-share companies are attractive to global investors. As the United States continues to threaten to delist batches of Chinese companies, markets capital from countries like Switzerland, Germany, the UK and France will gradually grab the cake,” Cao Heping, an economist at Peking University, told the Global Times on Thursday.

The United States will soon discover that it is not irreplaceable, he said, noting that Washington should correct its mistakes to create a healthy business environment for the listing of foreign companies, including those from China, in order to to allow Americans to share in the dividends of China’s development.

In April, the United States added 17 U.S.-listed Chinese companies to its so-called provisional list for possible delisting, including BEST Inc and Li Auto Inc. So far, the SEC has added five batches of Chinese companies on the provisional list, citing its own Holding Foreign Companies Accountable Act, which came into force in 2020.

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