Analysis-Chinese firms set for record US listings, undeterred by geopolitics
By Samuel Shen and Selena Li
SHANGHAI/HONG KONG (Reuters) -A record number of Chinese companies are seeking a U.S. listing this year as onerous domestic listing rules and the prospect of better valuations convince them to brave volatile Sino-U.S. relations and U.S. calls for strict oversight of Chinese firms.
In the first half of 2025, 36 mostly small and mid-sized Chinese companies went public in the U.S., following a record-breaking year of 64 in 2024, said law firm K&L Gates.
Many of those firms went public through special purpose acquisition companies (SPACs) - listed companies set up to buy mainly startups, making the startups public without them having to go through the lengthy initial public offering process.
Waiting to list on the Nasdaq are more than 40 Chinese companies, including a mobile advertising service provider and a traditional Chinese medicine maker, Chinese disclosure showed.
That number, which excludes confidentially filed listing applications, will take the annual tally of Chinese firms going public in the U.S. to a new high if all materialise this year.
"I think it’s a healthy year for Chinese IPOs. It will probably be a record year or near that," said David Bartz, partner at K&L Gates, who has built a "robust" pipeline of Chinese clients seeking first-time share sales in the U.S.
Chinese firms have had a harder time going public at home since the government tightened listing rules in 2023, raising the appeal of listing via SPACs in the U.S., as well as that country’s deeper pool of capital.
Pursuing a U.S. listing amounts to a bet that calls from U.S. lawmakers aimed at diminishing Chinese access to the world’s largest capital market can only go so far, bankers and lawyers said.
One listing hopeful is racing car manufacturer Xinghui Car Technology, whose head raised a toast at a Shanghai hotel in June to celebrate a major step toward going public in the U.S.
"The U.S. capital market is one of the world’s biggest. It’s liquid and allows easy access to funding," said Xinghui Chairman Song Wenfang upon signing a preliminary agreement to be acquired by Nasdaq-listed SPAC UY Scuti.
Since Xinghui’s celebrations, investors have pushed U.S. share prices to record highs, expecting trade deals to be the beginning of the end of uncertainty wrought by months of U.S. President Donald Trump threatening to impose steep tariffs.
The China Securities Regulatory Commission, which oversees Chinese firms’ offshore sales of securities, did not respond to a request for comment.
SPAC SURGE
Over 100 Chinese firms, including technology leaders Alibaba (NYSE:BABA), JD.com and Baidu (NASDAQ:BIDU), are U.S.-listed, boasting a combined market value of about $1 trillion as of March, showed data from the U.S.-China Economic and Security Review Commission.
In April, tearoom chain Chagee debuted on the Nasdaq after raising $411 million in the biggest IPO of a Chinese firm in the U.S. this year.
Of those seeking to list, a growing number are pre-profit or even pre-revenue startups, mainly in the tech sector, aiming for a quicker means of raising capital through a SPAC listing, said Karen Mu, managing director at Alliance Global Partners (NYSE:GLP).
That demand has contributed to the total number of firms listing in the U.S. via SPACs almost doubling last year to 57 and climbing to 76 so far this year, showed SPACInsider data.
The increased Chinese interest, however, has caught the attention of U.S. lawmakers who called for the delisting of Chinese firms from U.S. exchanges as recently as May citing national security concerns.
In June, the U.S. Securities and Exchange Commission (SEC) singled out China as it sought to raise disclosure requirements for listing hopefuls.
A spokesperson for SEC declined to comment on the Chinese listing trend beyond saying the regulator gathers information on the number of all foreign companies listed on U.S. exchanges.
Spokespersons for the New York Stock Exchange and Nasdaq declined to comment.
DOMESTIC HURDLES
The rush of Chinese listing hopefuls heading West is being fuelled by high regulatory thresholds for listing at home as well as criteria skewed to spur growth of sectors in line with national interests.
In China, a company needs to exceed a certain size or be profitable to qualify for a main-board listing. Alternatively, to list on tech boards, firms need to align with government self-sufficiency goals or achieve set levels of productivity.
"In the U.S., as long as you can meet objective rules set by regulators, you can go public," said Steve Markscheid, managing partner of Aerion Capital, who also serves as independent director of several U.S.-listed Chinese companies.
"Things are more subjective in China. The regulator needs to analyse whether the company is good or not. Only companies judged as good can go public."
The lengthy approval process and high listing thresholds means that for startups, "listing in China becomes mission impossible," said Xinghui deal adviser Ronald Shuang of Shanghai-based investment company Balloch Holding.
