[patosai]

The reason why IPO'd companies have higher valuations in China is because the stock market is controlled by the government. So instead of just giving the SEC a number of financial documents to prove you're not fraudulent and getting a stock broker to help you sell your stock, you do all of that and more to hopefully get put on a waiting list. And once you're on the waiting list, which has maybe around 600-700 companies, there might be some 300 IPOs a year. Out of the 10,000+ that want to go public. The Chinese government really cares about how the stock market is performing (up and to the right, right?) and they try to source some of their legitimacy from these economic gains.

In theory, if they let companies IPO when they wanted, supply and demand shows that the price of stock generally goes down. So all the capital that would have gone into other things in the market, like let's say undervalued tech companies, instead goes toward buying a handful of tickers which have inflated value because there's nothing else people can invest in.

Now as for valuations, PE and VC firms in China get a lot of money from the Chinese government which doesn't exactly need to see a huge return on investment since they're more focused on deploying capital in industries which the government identify as important (like AI). And so firms will invest at greater multiples and with larger amounts of money.