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Chinese companies that go public abroad were previously known from New York. Now discover Switzerland.
The names are hardly known in this country, but there are billion-dollar corporations that want to go public on the Swiss stock exchange: Sany, a construction machinery manufacturer, is valued at $22 billion. The two battery manufacturers Ningbo Shanshan and Gotion and the medical device manufacturer Lepu are also worth billions.
In addition to the Shanghai and Shenzhen stock exchanges, they should also be traded on the Swiss stock exchange. This step does not follow market logic, but China’s political will. That’s what Jacob Gunter, who researches Sino-European economic relations at the Mercator Institute for China Studies, says. “It is important to understand that Chinese companies do not simply follow free market forces, but the Communist Party and the government heavily influence their business decisions.”
Legend:
Something unusual was heard from the Swiss stock exchange this spring: four Chinese companies want to be listed on the local stock exchange. A novelty.
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The IPOs are part of a political plan. “When I hear that several Chinese companies are going public on the Swiss stock exchange, it sounds to me like a pilot project by the Chinese government,” says Gunter. It all fits into a larger trend. “Namely China’s search for new access to international capital – outside the US and the EU.”
China-EU and China-US relations are strained. Especially in finance. US authorities are threatening dozens of Chinese companies to ban them from local stock exchanges.
Big stock exchanges are vying for Chinese companies
The Swiss stock exchange SIX sees the interest of Chinese companies primarily as a result of the success of their own marketing efforts. Years ago, a first corresponding letter of intent was signed with the Chinese stock exchanges, followed by local advertising events, as media spokesman Jürg Schneider says.
“We have worked very closely with the Chinese stock exchanges in Shenzhen and Shanghai.” For example, joint workshops were held to show the Chinese participants the advantages of the Swiss stock exchange. “That’s certainly one reason why they will now choose Switzerland at best.”
But: Not only the Swiss stock exchange, but also the Frankfurt and London stock exchanges have been courting Chinese companies on site. SIX does not want to comment on the fact that the Swiss stock exchange is now being given preference for political reasons. “An answer to this question would be purely speculative,” says Schneider. “We can only speak for ourselves and say: We have worked very well with the Chinese authorities since signing the Memorandum of Understanding and maintain a very open and transparent relationship.”
Swiss finance department involved
The Chinese authorities are crucial: they have to approve every IPO of Chinese companies abroad. But not only Chinese, but also Swiss politicians had a hand in the planned IPOs. Before SIX went on an advertising tour in China, the Swiss finance department served as a door opener.
Legend:
Finance Minister Ueli Maurer (2nd from right) with his delegation during a visit to Beijing in April 2019.
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On a trip to China in April 2019, the then Federal President and Finance Minister Ueli Maurer took the Swiss stock exchange SIX with him. During this visit, the relevant basic documents were renewed and signed in the presence of Maurer, paving the way for Chinese companies to go public on the Swiss stock exchange. Their share prices should appear on the local stock tickers by autumn.