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China's US-listed tech companies seek domestic listings as regulations ease

China's top technology companies listed in the U.S. are seeking domestic listings to show national support as officials draft regulations to facilitate their return, the Financial Times reported March 6.

Search engine Baidu Inc. and mobile games maker NetEase Inc. declared their support for the plan at the sidelines of the annual meeting of the country's parliament, the report said.

"If regulations allow...we will definitely want to come back to the domestic stock market as soon as possible," Baidu CEO Robin Li said March 2. "Of course we're thinking about [listing in China]," NetEase CEO Ding Lei told state media, the FT reported. "Whenever [the regulations] are ready, we can list straight away."

Online travel giant Ctrip.com International Ltd. said it was also discussing with regulators. "We are very proud to be part of this first wave of internet companies," the company told the FT.

Regulatory barriers have prevented China's technology companies from listing on the mainland. Startups often lack the required profit record to list domestically, while established businesses listed overseas are hampered by their foreign ownership structures.

But regulators are amending rules to lower those barriers as the government pushes to become a global technology power, the FT said.

Eight companies, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd., said media group Caixin, were part of a "first wave" in discussion with regulators to be allowed to issue "Chinese depository receipts."

CDR, a security that represents foreign equity but trades on a Chinese exchange, would be patterned after U.S.-listed American depository receipts. CDRs are deemed more suitable than generic equity listing, said Yan Qingmin, vice-chairman of China Securities Regulatory Commission. "The CDR approach is more appropriate, as this is also the global practice," said Yan.

CDRs would enable companies with an offshore listing to float in China, but it was not clear whether Chinese regulators would impose restrictions such as those that apply to IPOs on Chinese exchanges. Mainland bourses require, among others, a company's profitability and prohibit exotic structures such as dual-class shares and variable-interest entities, the FT said. Rules are expected to be ready by June, an IPO lawyer familiar with the regulatory discussions told the FT.