Seems a lot and I mean a lot of Chinese stocks after getting their IPO's and debuts on the US Stock exchanges are getting hammered, some have dropped over 90% of their value, others have gotten delisted.
The most recent Longtop Financial Technologies Group (LFT) on NYSE due to its auditors Deloitte resigning and restating its previous audits. Apparently in China, liquid capital doesnt actually mean "Cash" that is unless the accounting statements can be obtained from the HQ of the bank itself.
Assuming what has been published is true, someone at the branch created and stamped fake statements showing more money on the books than what they actually had.
The investors who lost their money betting on these Chinese companies really deserve to lose it all and more. High tech companies in China that are locally owned and operated and not a WOFE and they have a 700Mil USD market cap? Wow.
In a country that can produce knock off designer bags, fake beef/eggs/rice, poisoned milk, and recycled sewer oil, fake accounting papers would not be too far behind and I find it hard to believe that Deloitte was clueless to the whole scandal. 100% sure that the auditors were taken out to KTV's + hookers, given expensive gifts, and treated like
royalty so that they would not look too closely at the fake docs. After a few bottles of Mao Tai, even the lamest knock off looks good I guess.
Seeing how the Data Centers in China are built and run, how server rooms are put together, the lack of HVAC in telco closets. ZTE and Huawei Routers which are blatant knock offs of Cisco down to color, chassis design, the CLI and instruction set. Backup generators that do not have diesel and are not hooked up to the main building, UPS power that is nothing more than 10 rooms with car batteries hooked in series. The Chinese companies deserve more than a 700 Mil market cap, it should be a 10 Billion Market cap!!! China is the future!
Corruption is endemic in China, it doesnt shock or suprise me on bit. What does shock and suprise me is how the remainder of the world was fooled by China's supposed high GDP numbers, high unemployment rates, and fast growing economy.
Strip away the glossy facade and glittering exterior of Shanghai/Beijing/Guangzhou, what you will see is mind blowing. Yes the Chinese do have high GDP, is due to the goverments printing of the yuan.
They PRC afford to tear down a bridge and rebuild it 5 times in 3 years. They can afford to build an infrastructure or should I say empty towns or ghost towns where no one will live. A high speed rail from Beijing to Shanghai takes 5 hours while a plane takes 3.5 hours on average defies logic. Building skyscrapers which only last 20 years when in the rest of the world they last 50+. Thats why they have such high GDP numbers, its fake GDP.
Low unemployment rates? Sure they have low unemployment, its due to CIS or Chinese Inefficiency Syndrome. Efficiency is not in their everyday venacular, labor is cheap so hire 10 people to do the job of 2. Who cares it takes 30 times as long?
Need to demolish a road? It takes a crew with jackhammers 3 days to do, but machinery costs money, and if the machine breaks I need to spend more money to fix it or replace it. Instead lets hire 30 morons with sledgehammers and do this demo work in 3weeks. Your time to wait for the road to be repaired is not my concern, my profit is more important than your convenience.
Those who claim that China is the new world leader, think again.
Caveat Emptor Baby!