Sep 23, 2011 04:07 PM

Closer Look: On the Fence with VIEs

The Ministry of Commerce recently announced that it would consider making major revisions to regulations related to the use of variable interest entities in foreign investments. But many have already raised questions over the impact such moves could have on the foreign investment climate in China.

The VIE concept, adapted to circumvent rules on foreign investment in China, refers to a corporate ownership structure between a foreign-invested company and a domestic company. The domestic company exists only for the purpose of holding a license in sectors where foreign investment is barred by Chinese regulators.

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