With global competition for leadership in artificial intelligence, microchips, and smart-city infrastructure accelerating, what constitutes a reliable technology partnership is being reassessed by governments and markets. In global capital markets, this reassessment is translating into a more stringent emphasis on transparency, which is increasingly a top priority for both investors and regulators.
An unprecedented level of scrutiny has thus been placed on private-sector actors looking to raise capital through going public, with a special emphasis on companies that operate at the intersection of advanced technology and geopolitics. Of particular interest have been firms producing what is being called "AI-adjacent hardware," and specifically the power systems that enable data centres, grids, and smart cities. These are now being looked at more closely, not only for the feasibility of their products but also for financial durability and regulatory exposure.
Increasingly being discussed in this context is Xiamen Hithium Energy Storage Technology Co., Ltd., a company that can be counted among the world's largest producers of stationary battery systems. Its rise to prominence was largely assisted by extensive state-backed financial support, something that only becomes an issue, as is the case with Hithium, when the company appears unable to move beyond a dependence on subsidies to achieve profitability. More concerning have been selective disclosure practices, which, as the company seeks to list in Hong Kong—filing its A1 application recently after previously seeing it rejected by regulators—raise broader questions for the Hong Kong Stock Exchange (HKEX) and its commitment to disclosure standards, investor protection, and reputational risk.
Hithium's financial disclosures, which are now being reviewed by regulators once again, paint a troubling picture of a company that has maintained a heavy reliance on Chinese government subsidies. Between 2022 and 2025, the company reported government grants of RMB 11.2 million, RMB 101 million, RMB 414.1 million, RMB 120.3 million, and RMB 334 million across numerous reporting periods. The issue that perhaps is not clear to investors and regulators—although the information is present in the disclosures—is the extent to which subsidies exceeded reported profits. Indeed, without them, the company would have posted recurring losses.
Such a heavy dependence on subsidies does not in any way insinuate misconduct; however, it raises legitimate questions about long-term solvency, commercial viability, and whether earnings are being generated through market competitiveness or sustained public support. For those regulators currently reviewing Hithium's application, such a distinction is critical, as financial performance that is structurally underwritten by state subsidies presents a risk profile that HKEX regulators might not want to expose their investors to.
A further issue relevant to Hithium's new attempt at an IPO is its global operation base, something that is being portrayed to investors as holding much promise for the company's future development. A USD 200 million assembly plant in Texas has been presented as evidence of global expansion and integration with a U.S. market that is becoming increasingly challenging to access. A review of Hithium's most recent A1 submission reveals the Texas site being referred to in eight separate sections. It is described as a "production base" and positioned as a hedge against tariffs.
Despite this, publicly available operational details show that the plant does not manufacture battery cells but rather assembles components that arrive from China, sometimes pre-assembled, in a way that does not alter the country of origin of the product, which remains subject to tariffs of up to 34 percent. The long-term viability of the site has also been questioned under Texas Senate Bill 17 (September 2025), which places limitations on the ability of companies headquartered outside the United States to own or control property in strategic sectors. This represents a significant impediment to Hithium's ability to expand, calling into question the added value that such a facility even brings to the company or its investors.
A further recent challenge, noted in a recent article in Newsmax, concerns limitations placed on Hithium through its designation under Section 154 of the 2024 U.S. National Defense Authorization Act. This designation prevents the U.S. Department of Defense and its suppliers from contracting with six named Chinese firms, including Hithium, rendering the company's products ineligible for federal reimbursement and incentive programs. This includes access to clean-energy credits, without which a project's costs can rise by as much as 30 percent.
Of concern to HKEX regulators should be the fact that none of these commercial risks related to tariff exposure, land security, or eligibility for government incentives are clearly presented in the company's A1 filing. Indeed, such material facts directly impact valuation, alongside investor risk assessment and decision-making.
For HKEX regulators, who this year saw their exchange become the world's largest listing destination by total funds raised for the first time since 2019, the risk at hand is tremendous. As of November 2025, funds raised through IPOs for the year reached HK$259.4 billion (US$33.3 billion), a 228 percent increase compared to the same period in 2024. With over 300 active listing applications in the pipeline, the highest number on record, strong momentum into 2026 is expected. However, the exchange's credibility rests on the perception that IPO candidates are rigorously vetted and that disclosure standards are upheld at the highest possible level. Allowing companies to advance listings while omitting such information risks not only undermining investor confidence but, ultimately, the exchange's international standing.
