A bumper year for Chinese IPOs in the United States last year - thanks largely to Alibaba's record US$25 billion listing - has overshadowed a retreat from that market by almost as many Chinese firms that entered it. Fourteen Chinese companies delisted from US stock markets last year due to concerns over compliance costs and low valuations amid allegations of fraud against a number of firms that spilled over into broader suspicion of Chinese enterprises. Three Chinese firms are now being privatised in the US stock markets, said Wu Niping, a Shanghai-based partner at US law firm Fenwick & West, naming them as online gaming firms Perfect World and Shanda Games, and mobile and internet security firm NetQin. "There is a growing trend of Chinese companies going private in US capital markets," Wu said. The 14 firms that delisted had a total privatisation value of more than US$7 billion, according to data compiled from media reports. They include eight information technology firms. Fifteen mainland and Hong Kong firms completed initial public offerings in the US last year, raising US$28.6 billion, according to media reports. Wu cites the high compliance costs that come with a US listing as a key motivation for a delisting. The Sarbanes-Oxley Act of 2002, a response to a spate of corporate and accounting fraud cases, adds significant compliance burdens on listed companies. Dane Chamorro, Asean managing director of consultancy Control Risks, said a crackdown by the US Securities and Exchange Commission (SEC) on accounting irregularities among a number of Chinese firms was also a factor. "Many of these companies should never have been listed because they were not eligible or couldn't or wouldn't meet the disclosure standards required, while some were outright frauds. It's well known that there were several Chinese so-called consultancies travelling around China offering to list companies abroad for a fee," Chamorro said. The fallout from fraud allegations levelled at some companies, particularly by short sellers such as Muddy Waters, had lingered, Chamorro said. Muddy Waters published a series of fraud allegations, from 2010 to 2013, against several Chinese firms listed in North America. In 2011, the US short seller began its critical coverage of Focus Media. The display advertising firm delisted from Nasdaq for US$3.7 billion in 2013. Focus Media was one of 12 Chinese companies that delisted from US stock markets with a total privatisation value of US$7.58 billion in 2013, according to media reports. The company, whose investors include the US-based Carlyle Group, is eyeing a possible US$1 billion IPO in Hong Kong this year, reports say. Chinese companies that had raised money in US capital markets now saw higher valuations at home in the A-share market or in Hong Kong, Wu said. "In China, the price to earnings ratio is over 20 for online gaming firms, but in the US it is around 10. The Chinese companies think they are better off delisting from US markets and coming back to the Chinese market." In February last year a Chinese copper recycling firm that was privatised from a New York listing in 2012 completed a Hong Kong IPO at almost 10 times its delisted value. China Metal Resources Utilisation, known as Gushan Environmental Energy when it was a US-listed firm, was privatised in 2012 at a valuation of US$31 million. "A lot of the delisting of Chinese companies [in the US] last year was driven by the feeling that their value was not truly reflected in their share price and trading volume," said Lance Chen, a Shanghai-based partner at law firm Baker & McKenzie. "The desire of Chinese companies to re-list in Hong Kong or mainland China is partly due to their venture capital and private equity investors, who are seeking an exit," Chen said. Stephen Peepels, Asia-Pacific head of US capital markets at law firm DLA Piper, said the 15 US listings by Chinese companies last year showed the US market for Chinese firms was improving greatly. "More Chinese companies listed in the US in all of 2012 and 2013 combined. This is a very exciting trend. We are working on more projects of this nature than in prior years," Peepels said. "The bad publicity over Alibaba could impact (US) investor demand for Chinese company shares if Alibaba's share price is significantly impacted, or if Alibaba has troubles with the New York Stock Exchange or the SEC. "If Alibaba is able to move beyond this current troublesome period and continues to trade well, then it seems unlikely the currently publicity will have any meaningful impact on future US listings by Chinese companies." The State Administration for Industry and Commerce last month released a white paper that criticised Hangzhou-based Alibaba for allowing fake goods to be sold on its online platforms. While a dispute between the regulator and the e-commerce leader has eased, US regulators have requested information from Alibaba.