DEFINITION of 'Chinese Depositary Receipt - CDR'

A Chinese Depositary Receipt (CDR) is a type of depositary receipt (DR) that is traded on a Chinese stock exchange. A DR is a certificate issued by a bank that represents equity in foreign companies. Therefore, a CDR is a certificate issued by a custodian bank that represents a pool of foreign equity that is traded on Chinese exchanges.

BREAKING DOWN 'Chinese Depositary Receipt - CDR'

Chinese regulators have modeled CDRs after U.S.-listed American depositary receipts so that overseas stocks could be traded on China’s mainland market. The goal of issuing CDRs is to lure capital back to the Chinese market in order to drive the economy, as China’s tech giants have traditionally opted to list outside of their home market. The issuance of CDRs allows both Chinese institutional and private investors to own stock in foreign companies.

What is a Depositary Receipt (DR)

Depositary receipts originated in the United States in the 1920s. Under a depositary receipts system, a portion of a company’s shares are transferred to a custodian bank, which acts as a middleman broker, which then sells the shares on an exchange outside of the country. While depositary receipts are not technically shares, they allow investors to hold shares listed elsewhere through the custodian bank.

Why Chinese Companies Have Listed Overseas

A large number of Chinese technology companies have listed overseas in the past to avoid the legal and technical barriers to IPOs they would encounter on the mainland, as well as to gain access to international investors and bond markets. The IPO restrictions include those on weighted voting rights and mandatory requirements on applicants’ profitability. Additionally, the larger Chinese firms are often incorporated in places such as Cayman Islands to bypass China’s securities requirements and get access to foreign capital markets.

The Advantages of CDRs

CDRs give domestic investors a way to invest in Chinese firms that are listed overseas. China has brought forth some of the world’s fastest-growing technology businesses; however, Chinese investors have been unable to share the gains. Also, the country misses out on the future growth that these stocks earn when they list on a foreign exchange, so CDRs offer a way for that growth to come back to China. In fact, the potential scale of a CDR market could pass a trillion dollars.


  1. Custodial Receipt

    A custodial receipt is an ownership interest in receipt form ...
  2. Gross Receipts

    Gross receipts are the sales of a business that form the basis ...
  3. American Depositary Receipt - ADR

    An American depositary receipt (ADR) is a certificate issued ...
  4. Vault Receipt

    A vault receipt is a document that shows ownership of precious ...
  5. China Concepts Stock

    China Concepts Stock is the stock of a company whose assets or ...
  6. International Depository Receipt ...

    An international depository receipt or IDR is a negotiable certificate ...
Related Articles
  1. Investing

    American Depositary Receipt Basics

    Thanks to American depositary receipts, investors now have a world of investing opportunities to choose from.
  2. Investing

    What China Devaluing its Currency Means to You

    The Chinese government is showing its craftiness in managing its money supply, but will it make a difference? And what does it mean for U.S. investors?
  3. Investing

    Chinese Companies Are Leaving U.S. Markets

    Chinese companies are pulling out of U.S. exchanges and that may be a good thing.
  4. Insights

    Charles Schwab Announced Depositary Shares Offering This Week

    Charles Schwab announced a offering of depositary shares.
  5. Tech

    Can the Tech Sector Save the Ailing Chinese Economy?

    The tech sector has been the sole winner in the declining Chinese market. Does it have the potential to sustain the momentum, and can it save the Chinese economy?
  6. Insights

    Is It the Right Time to Invest in China?

    A crash in August and a partial recovery thereafter. What's driving China's markets, and are Chinese investments still a good bet in the long run?
  7. Insights

    China's $9 Trillion Bond Market Showing Signs of Distress

    China's economic growth has slowed recently among shifts in global demand and a strengthening U.S. dollar.
  8. Insights

    China Owns US Debt, but How Much?

    See how much U.S. debt is actually owned by the Chinese, what it means to the economy, and why China is willing to lend so much money.
  9. Investing

    Do You Need A Rent Receipt?

    Landlords don't always bother to send receipts to renters. But there are important reasons renters should insist on getting proof they paid their rent.
  1. What are the differences between global depositary receipts (GDRs) and American depositary ...

    Discover some of the similarities and differences between global depositary receipts and American depositary receipts, and ... Read Answer >>
  2. Does a Company's American Depositary Share Equal One Share of Common Stock?

    American depositary shares (ADS) are issued when a foreign company asks to trade its shares on an American exchange. Here's ... Read Answer >>
Trading Center