This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How China Small-Caps Can Come Clean

Stocks in this article: FUQI RINO NEP CSKI CHBT CMFO CEU ONP

Inaccurate and outdated Web sites

It is important to remember that with many of these companies, senior management is not fluent in English and therefore does not focus on their English language website. This is often delegated to an outside firm to design on a one-time basis, and Web sites are not updated. Clearly, this is unacceptable. I have invested in companies that I felt were very solid, and in my discussions with management, I emphasized that their Web sites (which are often downright pathetic) can be a deterrent to other investors and can therefore impact the stock price.

In my experience, many Chinese companies still don't get it, and I still see many terrible Web sites even at companies that are performing very well financially. Typically, companies that use a solid IR firm will have a better-looking Web site, but that is still no guarantee that it will be updated on a regular basis. I am hopeful that this will start to change, and in some instances, I see progress, but in 2011, I still expect to see many pathetic Web sites for Chinese companies.

Also, stating the obvious, even while a great company may have a terrible Web site, a fraudulent company may have a fantastic Web site. The point is that a bad Web site is unacceptable for a company that wants to be shareholder-friendly and, despite being a triviality, it can have an impact on investor demand for the shares, thus affecting the share price.

Unprofessional reliance on free email services

When an investor tries to email the CFO of a NYSE, Nasdaq or Amex-listed company (with a market cap of perhaps several hundred million dollars) and the CFO can only be reached at wang1634@, it certainly does not inspire confidence. In fact, it immediately conjures up the image of a fraudulent company operating out of someone's basement. With one company, I was so adamant about it changing to professional emails that I even bought a domain name for the company and signed it up for email. The company's excuse was that it had been using the existing Yahoo! email so long that it was reluctant to change. Ultimately, it did acquire a real domain name and now they use professional emails. It took more than a year.

Again, this is very common in China at companies big and small, public and private. It does not raise any eyebrows with investors in China at all, but for companies listed in the U.S., it is not acceptable simply due to the negative image it creates among investors. That said, even a fraudulent company (or perhaps especially a fraudulent company) can have a very professional-looking email address and not be legitimate. My point is that this is just a cosmetic issue that companies need to pay attention to.

4 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs