MAINLAND authorities may introduce strict guidelines to curb the rush of Sino-foreign joint ventures eager to raise funds by listing overseas. Two China joint ventures are already listed on the New York Stock Exchange and in each case only the equity owned by the foreign party was listed. In addition to China Tire Holdings and Ek Chor, Hong Kong-listed China Strategic Investment has recently announced its brewery joint venture will be listed in the American market. China securities specialists say many more joint ventures have also applied to list abroad as it is both a fast and convenient way to raise funds. But Chinese authorities have condemned the practice, saying it poses unwelcome competition for their specially selected, state-owned enterprises, since it would exhaust the pool of potential foreign investment money. At present, foreign parties do not require approval from the China Securities Commission to list their tranche of a mainland joint venture abroad. Companies need only meet the listing requirements in the United States without going through the Chinese securities authorities. However, some professionals warn this attractive fund-raising avenue could soon come under Beijing's control and they fear if China does not handle the issue carefully, it may send the wrong signals to foreign investors. Meocre Li, managing partner of Arthur Andersen, said some foreign investors thought they had the right to realise their investments because receiving an annual, fixed interest payment was insufficient. Chinese authorities wish to curb the trend since these joint ventures form part of the state's assets. A local lawyer said there were three possible ways for foreign joint ventures to list overseas. The first was if the majority shareholding was held by the foreign party under existing rules. The foreign party would then have the right to manage its own shareholding and to make its own fund-raising decisions. The second way is if the foreign party's parent company is incorporated offshore, in for example, Bermuda, although the parent of the majority shareholder is the Chinese party. It is difficult for mainland authorities to maintain control if the parent company of the foreign party is listed in an offshore centre. Thirdly, the foreign party could buy a majority shareholding of a venture at a low price with a huge discount to net asset value and list its shareholdings in the joint venture at a high price-earnings ratio. Often, the foreign partner may offer certain incentives to the Chinese party as compensation for the sale of its stake at a cheap price. Many foreign companies originally planned to list the joint venture in China but changed to an overseas flotation due to the weak performance of the China securities market. Mr Li said listing overseas was a loss to the state because the venture could have been locally listed and raised foreign funds for China as a whole. But it took a long time to go through the procedures for a mainland listing. and there was a quota system for the number of companies obtaining approval to float their shares.