In a surprising announcement on Tuesday, Chinese handset maker Xiaomi suspended its ambitious dual listing plans for China and Hong Kong after receiving a detailed query from the mainland regulatory body, CSRC.
This followed official feedback from the mainland regulator last Thursday on the Chinese company’s much-anticipated plan for a listing in China.
Although Beijing clearly wants to lure tech giants such as Baidu, Alibaba and Tencent back home, this sets the tone for other companies intent on listing in China.
In a 30-page report, CSRC raised 84 issues with the listing plan, which focused on a new business model that Xiaomi described as “hardware + new retail + internet service”.
In the end, CSRC said it respected Xiaomi’s decision to suspend its mainland listing.
The delay hurts Xiaomi at a time when it hopes to raise US$10 billion in fresh capital from the market.
Xiaomi is now reportedly pushing ahead with its Hong Kong listing next week with an eventual listing to come before mid-July.
Initial responses to Xiaomi, whose mobile phones are strikingly similar to the Apple’s iPhone but sold at a much lower price point, were lukewarm.
It was reported that most investment raised so far comes from local companies, with the exception of Qualcomm. Half of the eight new investors are asset managers from the four biggest state-owned banks.
Xiaomi must prove its attraction to foreign investors now that its Beijing door remains closed.