Access to Chinese companies is easiest through American Depository Receipts (ADRs). ADRs can be bought and sold just like every other publicly traded stock in the United States, and they pay dividends just like any other stock, but their basic structure is different.



A Depository Receipt is a security that reflects the stock of a foreign firm held by a US bank when you buy an ADR.



Alibaba Group is a good example of this (NYSE:BABA). ADRs for the Chinese e-commerce giant are among the most widely traded in the United States. As Alibaba's custodian bank in the United States, CitiGroup holds each ADR on the NYSE as one Depository Share.



Developed in 1927, this investment structure allows multinational corporations to access North American investors without having to deal with the red tape of a traditional US exchange listing. Several international companies would not be able to list in the United States without the ADR framework due to regulatory disparities around the world.



If you invest in a Chinese ADR, there will be no difference between your Chinese ADR holdings and your usual U.S. stock holdings.