China Based Companies - Why The Prejudice?

The pictures above depict the discrimination of China based companies listed in our KLSE.

Average PE for the automobile industry is 14.25, however China Automobile Parts (CAP) trades at a PE of 2.58 (approx. 82% below industry average).
Average PE for consumer durables industry is 26.86, however XINQUAN, MSPORTS, MAXWELL and XDL trades at PE ~ 2 (approx. 93% below industry average).

Problem Statement
Most people are fearful when it comes to investing in China based companies, not only in Malaysia but across the globe. Only a handful are successful in gaining investor confidence to trade at a fair PE ratio. Why is this so? Potential fraud and poor corporate governance perhaps?
I've done a little research on some Chinese companies, quite a number offers good EPS with a strong cash balance. With that, why does the company reward shareholders with dividends or any other forms of rewards?

Findings

Did you know that every foreign listed China companies have to maintain a statutory reserve of 50% retained earnings to share capital issued? The companies must transfer a maximum of 10% of its net profit after tax to the People's Republic of China (PRC) until it meets the requirements of the statutory reserve. Until then, the company cannot reward shareholders with dividends.
I've also noticed that all of the China based companies I've researched had issued a bonus issue of shares and/or warrants.

Analysis

Once a China based company is listed on a foreign exchange, most if not all tend to give out bonus issues to increase their share capital. Because of this, it takes a long time for these companies to accumulate their statutory reserves. These Chinese companies can take up to several years before they actually achieve the required reserve.
This regulation imposed by the PRC is certain to benefit China significantly. Chinese companies may list their stocks all over the world, channelling funds from most stock exchanges back to their country.

Impact

Shareholders' of Chinese companies takes a long time to enjoy the returns from their investments. Dividend payments are infrequent as a result of the regulation. Also, capital gains are limited without institutional investors.
Consider XINGHE, since it is the latest listing of a China based company in our exchange. Share capital is RM234.85mil., with an additional bonus warrants with a book value of RM117.425mil. Total share capital is RM352.275mil hence XINGHE is required to maintain a statutory reserve of RM176.1375mil. Bursa has 10 Chinese companies listed as at 6/12/13, so total statutory reserve due to China is RM1.76bil! This is only in Bursa alone. In the US, there are ~200 China companies listed. I'm pretty sure the size of share capital are much greater than in Malaysia, so...imagine the amount of funds due to China? Its no wonder how China is able to grow at such a pace after all...

Reference

http://www.wikinvest.com/stock/China_Housing_&_Land_Dev_%28CHLN%29/Statutory_Reserves
http://bursastocktalk.blogspot.com/2013/06/bursa-malaysia-listed-china-based.html
http://topforeignstocks.com/foreign-adrs-list/the-full-list-of-chinese-adrs/