RED CHIPS have grown rapidly in the last few years and now account for more than 14 per cent of market capitalisation on the local bourse, according Alex Ko, director of Peregrine Capital. The number of China-background companies listed on the Hong Kong stock exchange has risen from five in 1991 to more than 20, with a total market capitalisation of over $250 billion. There are several concerns and problems over the mainland companies when they are seeking listings locally. Mr Ko said the ability of a mainland enterprise to obtain foreign currency, management experience, and ability to manage foreign exchange risk were major concerns of the local stock exchange, potential investors and merchant bankers. It could cause difficulties if there are different interpretations of a company's value by Hong Kong and Chinese valuers. Problems could arise if the mainland valuer did not use international accounting methods, Mr Ko said.