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

Praise for Bett ing 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

Acknowledgments xi Preface xv Chapter 1 Wagers of the Dance: China, America, and the Interplay of Public Equity 1 A Hierarchy of Financial Footwork 1 IPOs for Cash–out and Cash–in 5 A Ground–Level View 7 U.S. China Issuances Measuring Up 22 Chapter 2 Realities, Theories, and Gung Ho: The Ying and Yang of Chinese Issuances 25 The China Wave 25 Big–Stakes Games 28 Ying–Yang IPOs 32 Market Détente 35 Breaking Molds 40 Adam Smith′s China Bet 42 Gains, Rules, and Risks 44 Information versus Noise 46 Real "Gung Ho" 48 Chapter 3 China Mobile: The Big Bet 51 First Dish in an IPO Banquet 53 Birth in a Maelstrom 57 Ripple Effects 60 Assimilating Global Standards 62 Of Men and Governance 66 Red Chip Scare 68 Spillover Effects 71 Quantity, Banditry, and Quality 75 New Generations, New Markets 78 Nothing and Everything 81 Chapter 4 Spreadtrum Communications: When the Chips Are Down 85 Stirring the Waters 87 The Basic Spreadtrum Story 92 Leading a New Chinese Industry 96 Pulling Back from the Brink 98 Shortsighted Shorting 101 Shorts Caught Short 105 Chapter 5 Calling the Bluff: Truths, Fictions, and CRMs 109 Initial Misgivings 111 In Through the Back Door 113 Dawn of the CRM Dread 116 A Short Love Affair for CRMs 119 Unaccountable Accounting 123 The Din of CRM Noise 125 A Reversal for RM Overhype 128 Chapter 6 Longtop Financial: The Costs of Dirty Dealing 133 The Longtop Shocker 133 A Fallen Icon 137 Deception′s Depths 139 A China Problem? 142 New Stakes in the Game 145 The SEC′s Big Bet 148 Upping the Ante 150 Beyond the Brink? 155 Chapter 7 Continuing the Bet: Accountability and Adaptability 161 Evolving Accountability 161 The Adaptability Challenge 163 Appendix 167 Notes 187 About the Author 199 Index 201

Robert W. Koepp is an author and financial, economics, business, and communications consultant. His finance and economics–related writing focuses on creative and pioneering individuals, organizations, regions, and phenomena around the world. Fluent in Chinese, Japanese, and English, Koepp is the author of Clusters of Creativity: Enduring Lessons on Innovation and Entrepreneurship from Silicon Valley and Europe′s Silicon Fen and the translator of a bestselling Japanese illustrated biography of George Soros, both published by Wiley.