The subject is heating up
Regarding the future of VIEs in China, it seems at first glance as if there are two camps emerging, the tech companies saying the government supports the structure, and the lawyers saying more and stricter regulation is coming.
Bill Bishop on DigiCha covers the subject regularly.
He starts with a clear short definition
“VIE´s are a practice where a domestic company, a so-called variable interest entity (VIE), holds the license necessary for operating a business such as running an internet search engine or an e-commerce platform in China, and the foreign-invested company secures control of that domestic business through a set of contracts instead of share ownership.”
The China Accounting Blog has the following to say.
Rumors being heard all day say it recommends policy changes to bring the VIEs home.
I think the government should
“Recognize the reality that there already is significant foreign investment in prohibited sectors, and find a way to regulate this investment instead of pretending to prohibit it. Prohibition has not worked, and China needs entrepreneurial companies like Baidu, Dangdang, CTrip and Ambow Education. “
And then there is the potential crackdown on social networks also looming.
It’s no secret that social media in China is under fire. The government still hasn’t figured out what the proper regulatory equilibrium is for this industry. Ironically, we know about all of this via government leaks (also known as rumors).The latest rumor, whose circulation ended up contributing to a mauling of Sina’s share price in the U.S. yesterday, is that Weibo service (short messaging/Twitter) operations will require special licensing.
Here are the charts of some well known VIE´s listed in the US.
