Rumors are circulating that eLong (NASDAQ: LONG) plans to make many local acquisitions, but because 30% of its company is owned by an overseas company, it can not legally make those transactions.
Earlier this year, eLong sold 30% of its company to US-based IAC and then eLong went public on NASDAQ last month.
Local media are reporting that eLong had intended to cooperate with the China Civil Aviation Information Group to launch a special e-ticket service, but plans were put on hold because China does not allow foreign-funded enterprises to operate within its aviation service industry.
What eLong may then do is arrange for a wholly-Chinese owned travel entity to be formed, and then eLong's offshore corporation signs some sort of agreement with that new Chinese entity. The Chinese entity can then sign agreements with Chinese companies. However the problem then becomes how to get the money out of the local entity and into the foreign company's coffers. eLong's CFO Derek Palaschuk will need to figure out the best route for the company to allow for clean foreign exchange transactions.