How legally sound are your investments in China?

Many foreigners have used variable-interest entities to invest in China, but some are now questioning if they will stand the test of time.
Michael Hickman, Simmons & Simmons
Michael Hickman, Simmons & Simmons

For years, the conventional wisdom has been that if you are a foreigner looking to invest in certain segments of China’s economy, a variable-interest entity VIE might be the best bet. But after investors felt they were burnt by Alibaba’s restructuring, which effectively brought the profitable e-pay business back onshore, there are now more voices in opposition to the use of VIE structures. Simmons Simmons senior counsel Michael Hickman talks about the investment approach.

Why have people used the VIE structure in the past
In China, the VIE structure can provide a framework to gain access to industries in which direct foreign investment is restricted or prohibited, and...

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