English

By Wang Shen

Chinese technology giant, Xiaomi Inc., announced on June 19 that it has delayed issuing its China Depository Receipts (CDRs) in the Chinese mainland to implement its two-step strategy.

Xiaomi has decided to slow down the pace of going public and implement its two-step strategy of offering shares in Hong Kong first and then issuing its CDRs at a “proper time.”

The China Securities Regulatory Commission (CSRC) said it respected Xiaomi’s decision and would cancel the scheduled review of its prospectus on Tuesday.

An analyst from the CITIC Credit Lyonnais Securities Asia (CLSA) Ltd. pointed out that Xiaomi had built a large Internet service platform through its unique, successful business model. The analyst believed Xiaomi’s market value has reached between US $80 billion to US $90 billion.

An expert stated that the reason why Xiaomi stopped issuing CDRs might be the current uncertainty in the domestic capital market.

The news of Xiaomi postponing the issuance of its CDRs will come as a relief to many people. It is hard for investors to estimate its value and make investment decisions because there are still a few questions that remain uncertain.

For example, Xiaomi has not decided to position itself as a hardware manufacturer or an Internet technology company, and it is not sure if there will be an arbitrage opportunity for its IPO in Hong Kong and its CDRs in the Chinese mainland.

While preparing for the issuance of its CDRs, the related supervision departments were worried about Xiaomi going public with bubbles, which would create losses for investors and hinder the market from adapting to the new economy.

Xiaomi’s CDRs are a good start for the A-share market in welcoming innovation pilots for the new economy, which means Xiaomi has played an exemplary role during the process of information disclosure, price inquiry and going public.