This Day On The Street
Continue to site
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

How China Small-Caps Can Come Clean

Inaccurate and outdated Web sites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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CSKI $0.06 -75.00%
CMFO $0.13 -23.53%
RINO $0.00 -99.00%
NEP $27.87 -0.46%
ONP $1.06 -7.83%


Chart of I:DJI
DOW 17,690.85 +39.59 0.22%
S&P 500 2,056.23 +5.11 0.25%
NASDAQ 4,736.6330 +10.9940 0.23%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs