In fact, many "Chinese Internet companies" are yellow bananas: although it seems that their business is in China and their management is in China, their funding sources and registration points are all overseas.

Internet companies are generally capital-light enterprises and do not have enough fixed assets to obtain mortgage loans from banks.

So the source of funding is often venture capital.

Venture capital often comes from abroad.

For example, Yahoo and SoftBank are major investors in Alibaba.

The main way to profit from venture capital is to cash out when the invested company goes public.

Considering that China currently prohibits foreign capital from controlling information companies, foreign venture capital generally refuses to list invested companies in the country (in fact, Internet companies actually controlled by foreign capital cannot be listed in the country, and variable entities are illegal in the eyes of the China Securities Regulatory Commission.

of).

Therefore, invested companies are generally registered overseas.

Further considering the cost of capital flows and tax issues, in the end most "Chinese Internet companies" are registered in the Cayman Islands or similar places with extremely loose supervision of corporate governance structures.

Therefore, from the perspective of Internet companies, we can ask another question: Why do many Internet companies that invest in U.S. dollar funds, are registered in the Cayman Islands, and are listed in the United States like to do business in China? From a regulatory perspective, China is very strict with listed companies.

The requirements are relatively high (originally for the purpose of protecting investors, but practice has proven that there are many disadvantages, but this is beyond the scope of this topic).

For example, companies are required to make continuous profits.

This is an impossible task for Internet companies.

For example, Douban announced six years after its launch that it would be profitable without further research and development, but Douban's profits so far are not significant.

If they wait until profits are made to enter the stock market for financing, many Internet companies will starve to death.

The U.S. Securities and Exchange Commission allows unprofitable companies to go public.

This requires a sound legal and regulatory environment to protect non-institutional investors.

And this kind of environment is rare on a global scale.

From the perspective of enterprise registration, China currently uses industrial and commercial registration, while the United States uses commercial registration, and the latter has very low requirements for the enterprise itself.

In the listing process, domestic approval times are very long.

After the New York Stock Exchange aligned itself with Nasdaq in 2009, its listing requirements were much lower than those in China.

As the most radical exchange in the world, Nasdaq even allows dual-class shares (one of the important reasons why Alibaba is not listed in Hong Kong is that the Hong Kong Stock Exchange insists on equal rights for the same shares).