Beijing plans to plug loopholes for overseas IPOs • China.Table

Through VIE companies, Chinese firms can trade their shares on foreign stock exchanges. The authorities now plan to crack down on this. They are concerned that domestic tech companies working with sensitive data could become too international.

By
Ning Wang

It is tax havens like the Cayman Islands that Chinese companies use to disguise their true structures. There, they set up variable interest entity (VIE) companies in order to go public overseas. Alibaba, Baidu, Didi, Tencent – almost all major Chinese tech companies listed on US exchanges use this construct. The goal? To circumvent Beijing’s restrictions that make it difficult for foreign investors to invest in Chinese tech companies.

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