Jinan Qingqi Motorcycle Co., Ltd

The case deals with the decision in mid-1997 of StarInvest, an American investment company, on whether to subscribe to a new issue of 230 million B shares by Jinan Qingqi Motorcycle Co., Ltd. Qingqi Motorcycle is incorporated in the People’s Republic of China, and B shares were tradable only among foreign investors. The case solution is in the form of policy report from Daniel Campbell, asset manager at StarInvest, to his Investment Committee. The report contains his assessment of the opportunities and risks from China investment in general, and his recommendations on the Qingqi Motorcycle stock issue in particular. The objective of this case is to introduce students to the unique accounting issues and investment environment in China. From working on this case, the students should become familiar with the developmental steps and basic features of China’s accounting standards and capital markets. An important theme that should be emphasized by the instructor is that institutional environments are more important at influencing the accounting information in a country than the accounting standards as written on paper. The case has been used in an international accounting course offered to the MBA students. It could also be used in a similar course offered at the undergraduate level. Students having completed an introductory financial accounting course should have the required knowledge and skills to work on this case. The case can be used either as an individual assignment or as a group assignment.