Listing on either of the two mainland Chinese stock exchanges, Shanghai Stock Exchange and Shenzhen Stock Exchange, rarely crossed the mind of Chinese internet companies until recently. Baofeng, the video player software and video content provider, finally made an IPO earlier this month on the Shenzhen Growth Enterprise Market. Gaming company Kunlun, or Kalends, debuted on the same exchange earlier this year. Another Chinese gaming company Chukong, which made an attempt for a US IPO in the first half of 2014, is now considering an IPO on a mainland stock market, company CEO Chen Haozhi said at a launch event earlier this month.

Sina Corp., listed on the NASDAQ in 2000, was one of the first Chinese internet companies to go to IPO. Since then, most Chinese tech companies have been traded in the US and a small number on the Hong Kong Stock Exchange.

The primary reason for not listing on any of the local markets is a majority of Chinese internet companies are foreign-funded and under VIE structure (foreign investment is banned in China’s internet sector.) A major driver for the US becoming the first choice for listing is a majority that its stock exchanges don’t require sustained profitability, a condition most internet companies (Chinese and otherwise) can’t meet in their first few years in operation.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com