How to Determine the Profitability of a Chinese Company
A must-read from The New York Times: Another View: Tunneling to True Profit in China
My favorite exchange is this one: “What was the point of the last two days if you are now going to use a totally different profit number?” I demanded.
He needed no time to find his thoughts. “You missed the point. We did that calculation at your request,” he said. “It’s a completely irrelevant number for us. Why would we give up our company for a lower value just because you want to make it legal?”
What's the takeaway for you, the American investor? Well, things are different over there. So diversify and be prepared for volatility. That said, I think people who do this and who are willing to roll with the punches a little bit stand to make a good bit of money.