Yao says that one lesson she learned advising Chinese companies to seek London listings is that the city's investors are willing to accept the fact that high-growth SMEs in China do not necessarily always have a perfect history, as these businesses were reacting both to a fast growing economy and changing government policies.

Therefore provided defects are not fundamental, investors may still invest in a Chinese IPO as long as relevant issues have been honestly and properly disclosed before investors make their decision, she says.

"In recent years, more and more Chinese companies realize the importance of, and pay attention to, the transparency of the company and the need for good corporate governance to win trust and long term interest from the investors," she says.

Despite the general consensus that valuations for Chinese companies on AIM are currently depressed, many advisers are still positive on Chinese companies floating their shares on the exchange in the near future.

"It is very hard for fund managers in the UK to find earnings growth by just investing in UK and European companies over the next few years. An alternative is to invest in Asian stocks," says Matt Butlin, head of equities at Allenby Capital, an AIM-nominated adviser and broker.

Allenby's first Chinese client, Global Lock Safety International Group, a Shenzhen-based provider of security services to retailers, was listed on the AIM in 2010. Since then, Allenby has helped another two Chinese clients to list on the market.

Butlin says that Allenby will continue to focus on helping Chinese companies to list on the London Stock Exchange, believing China's fast economic growth would make many consumer-facing Chinese companies profitable and hence attractive investments for London's fund managers.

"The market sentiment for Chinese companies in London is not very good at the moment because investors still remember the scandal of Chinese companies committing fraud on the US stock exchanges," he says.

"To change this perception, there needs to be some successful Chinese companies coming to AIM to deliver solid earnings growth and hence a good share price performance in order to rebuild investor trust."

cecily.liu@chinadaily.com.cn

(China Daily 01/18/2013 page15)