Regulatory and Legal Compliance Challenges - The introduction of a filing system for overseas listings in China starting in 2023 increases time costs and poses risks of failing to list if the filing is unsuccessful [2] - The SEC in the U.S. has strict disclosure requirements, particularly concerning audit working papers for Chinese companies, despite a cooperation agreement between China and the U.S. [2] - Domestic policies affecting industries like real estate and education may lead to scrutiny of business models [2] - Legal risks include the potential for delisting under the Foreign Company Accountability Act and compliance challenges with the FCPA [2] Strategies for Regulatory Compliance - Companies should plan early and understand U.S. regulatory requirements before preparing for listing [3] - Engaging a professional legal team familiar with both Chinese and U.S. securities laws is essential for compliance [3] - Establishing a robust internal control system is necessary to ensure the accuracy and transparency of financial reporting [3] Differences in Accounting Standards - Significant differences exist between Chinese Accounting Standards (CAS) and U.S. GAAP, affecting revenue recognition and asset impairment, which can impact company valuations [5] - Companies in sensitive industries must handle audit working papers carefully to balance compliance and disclosure [5] Strategies for Accounting Compliance - Companies should adjust financial statements according to GAAP before listing to meet U.S. regulatory requirements [6] - Hiring an auditing firm recognized by the PCAOB can enhance the credibility of financial reports [6] Investor Culture Differences - Information asymmetry may lead to U.S. investors undervaluing Chinese companies due to a lack of understanding of their business models [8] - U.S. investors prioritize long-term growth potential, innovation, and management execution, which may not be effectively communicated by traditional Chinese companies [8] - Short-selling firms may target Chinese stocks, necessitating enhanced financial transparency and crisis management capabilities [8] Strategies for Investor Engagement - Frequent roadshows can help companies understand U.S. investor culture and effectively communicate their core competencies and long-term plans [9] - Establishing a professional investor relations team and improving ESG reporting can enhance transparency and attract U.S. investors [10] Geopolitical Conflicts - Uncertainties in U.S.-China relations, including trade tensions and technology sanctions, can affect the listing process and stock prices [11] - Domestic policy tightening, such as data security reviews, requires timely assessments of listing feasibility [12] Strategies for Managing Geopolitical Risks - Companies should consider diversifying listing locations and financing channels to mitigate market volatility risks [13] - Strengthening communication with investors to convey stable operational information can enhance investor confidence [13] Information Security and Data Privacy - Strict compliance requirements under the Data Security Law and Personal Information Protection Law pose challenges for companies handling user data [15] - Conflicts between U.S. data disclosure requirements and Chinese regulations necessitate compliant data processing solutions [15] Strategies for Data Compliance - Companies should clearly outline data compliance measures in their prospectus and conduct data security assessments before data export [16] - Maintaining close communication with government departments can help secure policy support for cross-border data flow [16] High Listing Costs - The financial burden of listing in the U.S. includes underwriting, legal, accounting, and sponsorship fees, which can be significant for smaller companies [17] - Ongoing compliance costs post-listing, such as regular audit and disclosure expenses, can also be high [17] Strategies for Cost Management - Conducting thorough financial planning and cost-benefit analysis before deciding to list in the U.S. is crucial [18] - Introducing strategic investors prior to listing can alleviate financial pressure and ensure sufficient funding for the listing process and subsequent operations [18]