"The new model will help domestic companies to achieve overseas listing goals without causing controversy such as the tax income outflow," he says.

The new model is in line with the Chinese government's regulation. But a problem lies in whether overseas investors would like to accept a model that is completely "made in China."

Due to a different regulatory environment, it is hard for overseas investors to accept Chinese incorporated companies. But things are improving.

"Hopefully, with the enactment of the new Company Law and Securities Law in China, Chinese companies will face a much more transparent regulatory environment, which helps to back up investors' confidence on Chinese companies," the industry insider says.

But DLA Piper's Rocky Lee says it is very hard to take the model seriously yet.

Lee argues that it's hard to understand and appreciate the new regulations without more concise implementation rules or written guidelines.

"China still lacks a clear and easy way to follow legal framework.That might come someday, but it is not here yet," he says.

"Overseas investors face numerous investment opportunities. Unless the Chinese company is extremely popular, would they take the chance?"

Or a domestic listing?

With the revival of the domestic market, however, the Chinese government is encouraging more and more companies to list domestically by continuously improving IPO examination efficiency.

Since the CSRC launched its non-tradable shares reform for listed companies last April, the split share reform on both the Shanghai stock exchange and Shenzhen stock exchange have gone smoothly.

The reform has driven the development of Shenzhen's GEM (the secondary board), which provides a new option for domestic companies to go public.

Statistics from Zero2IPO shows that the sum of domestic IPOs accounts for over 25 percent of all 39 VC/PE-backed IPOs in 2006.

Notably, IDGVC-backed YGSOFT Corporation listed on GEM on August 23. It is the first foreign VC-backed enterprise listed on the domestic capital market.

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