For a different (no doubt biased) perspective, see how Chinese companies listed on US stock exchanges are perceived by many US short sellers.
One sentiment I have heard from US short sellers is that if Chinese companies defraud US investors, Chinese market regulators don't care and US market regulators can't enforce anything even if they are forced to care. But if Chinese companies defraud domestic Chinese investors, then Chinese regulators may react strongly to take action against the offending companies or executives [1].
There are also complications with how Chinese firms listed on US stock exchanges are audited. Francine McKenna writes a lot about complications with audit (not specifically about ADRs) at her newsletter https://thedig.substack.com/
[1] there is an anecdote about one company that was selling shares to both US investors and their elderly Chinese employees without telling each group that shares in the company were also being sold to the other group, i.e. so both groups of investors were being lied to about the total amount of shares outstanding -- apparently one of the directors responsible for the fraud was taken out and shot.
One sentiment I have heard from US short sellers is that if Chinese companies defraud US investors, Chinese market regulators don't care and US market regulators can't enforce anything even if they are forced to care. But if Chinese companies defraud domestic Chinese investors, then Chinese regulators may react strongly to take action against the offending companies or executives [1].
There are also complications with how Chinese firms listed on US stock exchanges are audited. Francine McKenna writes a lot about complications with audit (not specifically about ADRs) at her newsletter https://thedig.substack.com/
There are some interesting perspectives in the wolfpack research podcast -- esp e.g. episode 3 & episode 8: https://wolfpackresearch.com/podcast/
[1] there is an anecdote about one company that was selling shares to both US investors and their elderly Chinese employees without telling each group that shares in the company were also being sold to the other group, i.e. so both groups of investors were being lied to about the total amount of shares outstanding -- apparently one of the directors responsible for the fraud was taken out and shot.