Now this is not to say that other countries' companies are immune to such misbehaviour (eg. Hin Leong) but there seems to be a significant no. of fraudulant cases by Chinese companies.
Given that the anon report collected by Muddy Waters had extensive investigative work which is difficult to do as part of due diligence, how do retail investors protect themselves against fraud when red flags such as understating liabilities or overstating revenue may not be so obvious?
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I am always cautious of companies with main operations in one country and list in another. especially for chinese companies. why would they want to list in another country, besides HK, when their market has more liquidity and more participants?
Malaysia-Singapore-Thailand due to close proximity, I am not as worried. If anything I can take a quick drive up and see whether their operations are real or inflated.
I also ask myself, do I understand the business enough such that their reported figures makes sense. And if I don't but I see the potential of that company, I buy ETF or UT. If anything fails in one particular company, likely I will not lose as much.