Watch out for related-party transactions. One of the criticisms leveled at Chinese companies has been around what's called "related-party transactions," said Stanford's Lee. That's when a CEO owns other businesses and does deals with those operations even if it's to the detriment of the listed company.
"A company could hire a supplier that might not be the best supplier, simply because that business is controlled by the shareholder," he said. "That's pretty pervasive in China."
Companies can get away with this, because one person often controls a large number of shares, and that shareholder typically wields far more power than the main shareholder of a U.S. company, said Lee.
Investors must find out who controls the most shares and then see if they're doing business with other companies that they hold.
"You need to keep this in mind," he said. "A related-party transaction may be done at a disadvantageous set of terms to the other shareholders."
While no investor can ever know exactly what's happening with a company, most experts do say that the problems that had come with investing in Chinese businesses are in the past.
The ones that will list this year are high-quality companies, said Lee. He has no doubt that when Alibaba goes public, its shares will be scooped up quickly.
"If people knew what this company was doing in China, they would be surprised," he said. "Their growth rate, dominance and penetration is staggering. It's a fascinating business."