May 13, 2020
I have served on several Chinese (and U.S. company) boards for companies on NASDAQ and AMEX serving as audit chair. I also worked with several Chinese companies were preparing for US IPO. I also have given talks a professional and academic meeting in the US, Europe, Asia on this topic. One example of my work is attached along with a valuable CPA journal article on the Chinese audit environment that might be of interest.
I focus on helping Chinese managers more completely represent their business activity and performance to US investors. I also work help professionals in the US including the attorneys, auditors, investors and investor relations personnel to understand the Chinese business. Some actions taken by Chinese managers can seem questionable and possibly misleading but are often the result of the managers being unaware of the way the actions are interpreted by US investors and/or unaware of some of the regulatory compliance requirements.
Additional efforts in translating the Chinese business to be more fully understood by the US investor and providing additional guidance and education on US requirements has the potential to improve the relationship between the businesses and the US and the basis for a more accurate valuation of the Chinese business. Similarly, professionals can be more effective if they are sensitive to the way the Chinese managers run their business and the gaps management may have in understanding the US perspective and compliance requirements.
This improved understanding is particularly critical due to the cloud of fraud that has been found in several Chinese businesses. I was appointed to the board and audit chair to clean up a fraud found in a US-Chinese business and appreciate the issues. I also was on a board subject to a short-attack, not unlike the recent GE attack, where we determined the attack was unfounded and we managed the process with no perceptible damage. I am fortunate to have experiences very effective entrepreneur in china that started successful GAAP profitable businesses while dealing with the environment of the frauds. Working with the short attack offers the perspective of how Chinese management reacts to situations where they have been running a profitable business that has an unexpected questioning of their legitimacy.
I believe that greater sensitivity to the issues by Chinese management and the professionals that advise and audit these business can result in a greater level of trust and rapport and would create an environment that would help the well managed Chinese businesses to successfully have their securities traded on the US market.