Understanding China, One Blog at a Time

An American in China

Chinese Firms Listed in USA Fight Back-

Posted by w_thames_the_d on July 7, 2011

Chinese companies who are not satisfied with monopolizing the ‘poison the world market’, have decided to bilk Americans out of our hard earned cash. And greed being what it is, we blind ourselves to the obvious issues of shitty Chinese quality of all sorts and buy their stock.
So it would come to no surprise that people from China, doing what they do best, allegedly cooked the books and mislead us on the value of their stocks, their loans, their sales, and almost anything related to integrity. So, the people in the US, being a relatively intelligent lot finally got wise and sold their Chinese stocks. The result is that many Chinese stocks were down and there were reports of a loss of around 40% across the board in some index.
The Chinese worried that the jig is up, are fighting back, but backed by a less than worthless educational system which has left them absent the ability to form a logical and cogent thought, their responses are less than useless. For example, according to the Chinadaily one CEO said that reports by Muddy Waters reportlackssupportingmaterial”.
Ironically the dimwit CEO who made this comment was bolstering the claim of Muddy Waters who said that Chinese firms would not allow access to their books by foreign firms and had put up the great wall of deceit and protection (my words) in order to prevent us from finding out their true financial position. Thus, if Muddy has insufficient hard proof, it is due to the lack of compliance by Chinese companies. According to Muddy, “We have identified a number of issues…we believe there is a high risk of material misstatements in the reported fundamentals” Thus all the Chinese company had to to was open up the books in the motherland, which is what the SEC is now seeking, but the Chinese who know how shitty their books are, is not in a hurry to do.
Sadly enough, those of you who have never been to the fifth circle of Dante’s inferno (China) are looking at China as if they operated like civilized humans, as I did before coming. Even my beloved father was telling me that I , who have lived here for less than 5 years and have decent experience with many Chinese companies and some decent contacts, does not know that Chinese quality and standards are good. I find this funny as even my Chinese friends tell me that when I go home and buy them gifts to not buy them something from here, and in a couple of recent surveys by a large consulting companies, 50-70% of the chinese do not trust products made here.
Although I like to joke about China, I truly enjoy the place, but when I talk about their product quality and stocks I truly believe that in general they are malignant. Not all of them of course, but statistics being what they are, why play Russian roulette. What I have learned here is that Chinese companies are not governed by their directors nor laws to an extent that make your humble author comfortable in trusting them. Thus, instead of parsing through the garbage to find the ‘Snickers bar of joy’, I will wait until they have proven themselves as a group to have won my trust.

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