Apparently investors know that. Share prices for the world's largest maker of earthmoving, construction and mining equipment fell 2.19% from Jan. 22 to Jan. 25, but they have risen past the Jan. 22 level since then.

In what has shaped up as an iconically famous case, Toronto-listed Sino Forest Corp. was accused by a short seller in 2011 of overstating revenue and giving false numbers about its timber acreage rights in China. The Canadian stock exchange forced the company to delist last year.

According to the online business news website Quartz, U.S. investors in China have lost billions of dollars after alleged accounting problems pushed more than 100 Chinese companies off stock exchanges in Canada or the U.S.

Still, major private equity firms such as Goldman Sachs ( GS), Carlyle Group ( CG) and KKR & Co. ( KKR) have proven they know how to work the China market.

Carlyle alone has invested around $4 billion in China, covering 60 deals, the state-run China Daily newspaper reported last year without giving a source. In July the group bought a 49% stake in Mandarin Hotel Holdings of China and will "work with it to tap the country's emerging mid-tier hotel market," the newspaper said, speculating that the deal was worth a high eight-digit figure.

There is no immediate reason to imagine these companies will be scammed. But Huang, among others, complain that all foreign investment firms in China face another barrier -- the recent formation of some 10,000 cutthroat local rivals doing business in Chinese yuan. They understand the Chinese market and deal-making mentality. Thanks to China's rapid economic growth over the past decade, they also have as much money as their foreign competitors. In 2010, yuan funds outraised foreign currency funds.

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