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Chapter 4

CSRC Review New Policy: Difficulty of Chinese Companies Seeking US IPOs Upgrades

Approval Cycle Extends to 6-12 Months, Why Hong Kong Secondary Listing Becomes a Haven

CSRC filing system and CAC data review dual hurdles, extended approval cycle, Hong Kong secondary listing becomes the choice of more and more companies

GFM Observation Team
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5 min read
IPOCSRCRegulatory PolicyHong Kong ListingVIE Structure

In 2025, the difficulty for Chinese companies seeking US IPOs significantly upgraded.

The CSRC filing system, implemented since March 2023, requires mandatory data review for VIE structure companies. As of the first half of 2025, approximately 70-80 companies (including Hong Kong) submitted overseas applications, with only 23 companies seeking US listing, and the approval process extending to 6-12 months.

The Nasdaq September proposal increases the stakes: minimum fundraising for Chinese companies $25 million USD, public float market value $15 million USD. The triple threshold is expected to eliminate 40-50% of small and medium-sized enterprises.

This article analyzes the impact of the new CSRC policy, based on the VIE risk among 286 Chinese companies listed in the US, as reported by USCC in March 2025 (159 VIE companies accounting for 91% of market value).

Core View: This is not a cold winter, but a precise reshuffling. The total number of successful IPOs for the year is expected to be 35-40 companies, raising a total of $1.5-1.8 billion USD.

Figure 1

I. Core Changes in the New CSRC Policy

1. Review Upgrade

CSRC Revision in March 2023:

  • Mandatory CAC Data Security Review (starting February 2022)
  • VIE companies need to be dismantled or reorganized
  • Delay: 6-12 months

2025 Approval Data:

  • Applications accepted in the first half: 37 companies
  • Estimated second half: 20-30 companies
  • Approval growth: Only 30%

2. Nasdaq Response

September Proposal targeting Chinese IPOs:

  • Fundraising Threshold: $25M (original $5M)
  • Public Float Market Value: $15M
  • SPAC Mergers require: $25M market value

Impact: The average fundraising for 2025 Chinese IPOs is approximately $50 million USD, with an elimination rate for small and medium-sized enterprises of 40-50%.

3. USCC Warning

March 2025 Report Data:

  • 286 Chinese companies listed in the US
  • Total Market Value: $1.1 trillion USD
  • 159 companies use VIE (accounting for 91% of market value)
  • Susceptible to SEC audit opaqueness accusations

The SEC established the Cross-Border Fraud Task Force in September, estimating 100-150 Chinese IPO cases in 2025.

II. Heat Map of New Policy Impact on Industries

DataTable: Missing data or columns

Figure 2

III. The New Red Line for VIE Risk

Analysis of VIE Divestment Costs

  1. Time Cost: Delay of 12 months
  2. Financial Cost: Legal, tax, and reorganization fees $2-5M
  3. Valuation Impact: Decrease of 10-20%
  4. Review Risk: Dual CSRC/CAC review

High-Risk Industries (VIE Ratio >80%):

  • Internet Platforms
  • EdTech
  • Fintech

IV. Hong Kong Secondary Listing: The New Haven

Why is Hong Kong the First Choice?

Five Major Advantages:

  1. Faster Approval    - Hong Kong: 3-6 months    - US Stocks: 6-12 months

  2. Laxer VIE Review    - Hong Kong standards are relatively friendly    - No need for complete VIE dismantling

  3. Significant Fundraising Scale    - 2025 Estimate: >$25 billion USD    - Surpassing Nasdaq

  4. Stable Valuation    - Avoiding US stock price drop risk    - Lower market volatility

  5. Low Geopolitical Risk    - Avoiding Sino-US friction    - Stable regulatory environment

2025 Hong Kong Market Performance

  • Chinese companies listed: 50+ companies
  • Total fundraising: >$25 billion USD
  • Global Ranking: First

V. GFM Viewpoint: The Way to Break Through Under Upgraded Difficulty

Highlights Summary

  • CSRC approval count increased by 30%
  • AI/New Energy lead (fundraising $1.1-1.5 billion USD)
  • Hong Kong secondary listing becomes a bridge, raising over $25 billion USD in 2025

Red Flag Warning

Three Major Risks:

  1. High cost of VIE divestment (delay of 12 months)
  2. SEC Task Force targets Chinese IPO fraud (predicted 100-150 cases)
  3. Nasdaq new threshold eliminates 40-50% of small and medium-sized enterprises

Investment Advice

Prioritize:

  • Non-VIE large enterprises (e.g., CATL)
  • Hong Kong secondary listing companies
  • AI autonomous driving leaders

Avoid:

  • Small and medium-sized medical companies (audit risk +20%)
  • Heavily VIE-dependent small and medium-sized stocks
  • EdTech companies

Timing Suggestion:

  • Focus on HK secondary listing in Q1
  • Predicted total fundraising: $1.5-1.8 billion USD

VI. Core Conclusion

The new CSRC policy is not a shackles, but a filter—2025 Chinese US IPOs will be more precise and resilient. The Hong Kong Stock Exchange becomes a haven, with the predicted highest global fundraising for the year.

— GFM Observation Team

2025-2026 Breakthrough Strategy

  1. Regulatory Adaptation: Prepare CSRC filing 6-12 months in advance
  2. VIE Optimization: Evaluate divestment costs, consider direct listing
  3. Dual Listing: HK+US combination, diversifying risk
  4. Fundraising Scale: Ensure the Nasdaq $25 million USD threshold is exceeded
  5. Compliance Priority: Pass the triple review of CSRC, SEC, and CAC

Only companies with hard technology, sufficient funds, and compliance capabilities can successfully break through under the new rules. The number of US IPOs is expected to further decrease to 25-30 companies in 2026.

Data Source: CSRC, USCC March 2025 Report, Nasdaq Official Announcement, GFM On-the-ground Research Cut-off Date: November 29, 2025 Risk Warning: This article does not constitute investment advice; investment carries risks, and caution should be exercised when entering the market

Follow the GFM "IPO Watch" column; more new policy interpretations will be coming soon.

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