"Dream" Is Hard To Come True &Nbsp; Mcglaughlin Has Lost The US Stock Market.

For domestic B2C companies, October 26, 2010 was an unusual day.

At present, Mcglaughlin's annual sales volume exceeds 1 billion yuan, ranking second in China's clothing B2C e-commerce enterprises.

However, it didn't last long. Just over a month later, Mcglaughlin was subjected to intensive litigation by American investors. By the end of the day, Mcglaughlin's class action in the United States had increased to 6.

Prosecuted Mcglaughlin

Mcglaughlin fell from heaven to hell in November 29, 2010.

On the same day, Mcglaughlin announced its third quarter earnings report.

At the same time, Mcglaughlin's other financial data's performance is also hard to say.

Gross margin declined by 400 basis points, sales, management and general expenses increased by 20.4% compared with the same period last year, and operating expenses increased by 19.8%.

The earnings report immediately triggered a reassessment of Mcglaughlin by US investors. The general view is that Mcglaughlin's gross margin has been negatively affected by rising costs and costs, and its performance is unlikely to reach IPO's expectations.

On the day of earnings announcement, Mcglaughlin's share price plummeted 39.9%, breaking its 11 dollar issue price.

In December 1, 2010, Mcglaughlin continued to plunge and closed at $6.65. The company's market capitalization plunged more than 50% in two trading days.

But this is not the worst news.

One week in early December of this year, Mcglaughlin was followed by 3 collective action cases. Up to January 5th this year, 6 lawsuits against Mcglaughlin had been reached.

This not only has a huge impact on Mcglaughlin's reputation, but also means a huge amount of compensation.

Insiders analysis, Mcglaughlin in the prospectus before the use of some "skills", their own

The United States Law Corporation, which sued Mcglaughlin, also said that Mcglaughlin's specific executives, directors and others involved in issuing prospectus and listing applications involve issuing false information, including or allowing major errors or misleading statements, thereby violating the securities law.

Regarding this, Mcglaughlin said that Mcglaughlin and any senior management and directors have not been sent to any copy of the claim, and the company is ready to make a strong defense against the claim.

There is no basis for litigation claims, and all litigation will not have a significant impact on Mcglaughlin's daily operation.

In fact, Mcglaughlin is not the first Chinese enterprise to face class action.

Statistics show that the proportion of Chinese enterprises listed in the US is about 8%, and the reason why they are prosecuted is nothing more than "financial problems" and "information disclosure opaque".

American stock market full of traps

Is this the price of listing in the US?

At present, there are three main listings of domestic clothing enterprises, that is, the domestic A share market, the Hongkong market and the NASDAQ.

Unlike the "approval system" of domestic A shares, the United States adopts the "registration system" for the audit of the listed companies. As long as information disclosure and financial statements meet the American standards, enterprises can get the opportunity to go public, and the success rate of listing in the United States is relatively high.

However, the US listing is not as easy as Chinese entrepreneurs imagine.

After listing, the company is in a multi spotlight. Besides the direct supervision of SEC and the exchange, as well as the supervision of the auditing firms, law firms, hedge funds, media and individual investors, the supervisors are ambushed in every corner, while making profits for themselves, it also promotes the healthy operation of the stock trading market.

Mcglaughlin encountered class action, which is a good play staged by law firms and investors.

"Class action against listed companies is a common practice in the United States, and prosecution is also very simple."

Zhao Hua, partner of McDonnell Douglas International law firm, said that after the company disclosed its performance, some lawyers would widely contact small shareholders once the share price went down, and seize the small "mistakes" in the quarterly reports or annual reports, so as to bring a class action lawsuit against the listed companies.

The reason why American lawyers are so active is that if a lawsuit wins, a lawyer can get a lawyer's compensation of about 20-30%.

In fact, a senior executive of a Chinese company, who has been sued for a long time, said that short selling power is the main driving force behind class action, and prosecution lawyers often form a chain of interests with the hedge funds' short sellers.

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The general situation of collective prosecution is that the fund companies (mainly like short hedge funds) seek lawyers, let lawyers collect evidence, and then go to some business related people or small shareholders to initiate a lawsuit.

Minority shareholders usually do not understand the situation, but they can also benefit from prosecution, so they are also willing to participate.

Once being sued, the price of the litigant company will drop sharply in the short term, and the fall will often be as high as 50% or even more than 90%, so the hedge fund will get huge profits from it.

In addition to strict supervision, the United States has a heavy punishment on illegal listed companies. Mcglaughlin has been involved in many lawsuits. If he loses, the compensation will be an astronomical figure.

In fact, the US stock market is far less beautiful than we seem. It is full of temptations and traps.

For those Chinese companies that have been or are ready to list in the US, Mcglaughlin's warning has to be taken seriously.

Domestic listing or listing in the US, or even going public, must be reconsidered.

Too eager to list dreams

In fact, there is already a long way to go between domestic enterprises and capital.

In the middle and late 90s of the 20th century, clothing companies such as Shanshan, Meyer and YOUNGOR went on the market in the domestic stock market. After entering the twenty-first Century, red bean, Lining, seven wolves, Bosideng, meth s, bang Wei, Hinur and a number of service companies landed in mainland China, Hongkong and even overseas securities markets, providing financial support for the development of enterprises.

The development of China's garment industry has changed from the initial price war to the brand war. The industry has the view that the brand war may be a capital war.

According to industry sources, nearly 100 textile and garment enterprises are waiting outside the capital market, many of which are repeatedly rushed back and forth.

But do they really need to go public? Some experts believe that some entrepreneurs may prefer short-term financing benefits rather than long-term strategic choices.

"Listing is not for listing, it should be a natural thing to go public."

Lin Hongnan, chairman of Fucheng (China) Limited, said that before going public, enterprises should first "improve their internal skills", and what to do and how to think clearly after listing.

In fact, "Germany has a variety of small businesses, but it is rare in the market."

Lang Xianping, a famous economist, says that they focus their energies on making products, which is the foundation of manufacturing.