Weak Bones in China

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Another day, another Chinese IPO dud that lands with a thud. Tongjitang Chinese Medicines (NYSE: TCM) went public on Friday, and it closed slightly below its $10 debut price.

The $9.75 final tally may not seem like much of a defeat, but this is a company that had initially targeted a range or $15 to $17 a pop for its debut. It even had seasoned lead underwriters in Merrill Lynch (NYSE: MER) and UBS AG. Unfortunately, even in the world's most populated country, this specialist in osteoporosis treatments just wasn't able to get moving.

Friday hasn't been a kind day to new China-based issues. A week earlier, it was Xinhua (Nasdaq: XFML). The financial-reporting company went public at $13 and closed its first day of trading at an embarrassing $11.70 mark. Things didn't get better last week -- it dipped even further to close out at $11.15.

These are difficult times. China recently raised margin requirements to remove some of the speculative froth from its exchanges. China's central bank, meanwhile, raised its rates over the weekend.

And there's more. Advertising behemoth TOM Group agreed to acquire its TOM Online (Nasdaq: TOMO) Internet and wireless-services arm. Display-marketing giant Focus Media (Nasdaq: FMCN) took advantage of a lull in China's IPO pipeline to snap up online-marketing specialist Allyes. Even NetEase.com (Nasdaq: NTES) is taking advantage of investor apathy in Chinese shares to embark on an ambitious share-repurchase plan.

This doesn't mean that all of the recent IPOs trading for less than what their initial investors paid for them will bounce back. TOM will ultimately be reabsorbed into the TOM Group bloodstream for less than its debut price. However, this is the kind of experience that usually makes it hard for anything short of quality companies to go public. So do expect some great bargains in the coming weeks if one of the fastest-growing markets continues to receive the cold shoulder treatment from the rest of the world.

Tongjitang will ultimately be at the mercy of its own medicinal solutions. If it can cure its own case of weak bones, that would be the best remedy to get the stock back into the double digits.

NetEase is a selection in the Rule Breakers growth-stock newsletter service. TOM Online is a Motley Fool Stock Advisor recommendation. Check out either Foolish investing service free for 30 days.

Longtime Fool contributor Rick Munarriz has been to mainland China just once, but he's longing to brush up on Mandarin and make it another go in the future. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.