Wal-Mart Stores’ recent nod of approval from Chinese regulators to take a 33.6% share in Niu Hai Holdings, which gives it a controlling stake in China’s largest online supermarket, Yihaodian, may be more significant in signalling the beginning of the end for the controversial VIE structure.
VIEs (variable interest entities) are a popular offshore vehicle utilised by foreign companies to invest in restricted sectors of China’s economy.
“The MOFCOM [Ministry of Commerce] merger control decision of 27 June 2012 was the first time that the term ‘VIE’ had been expressly used by a PRC authority,” Herbert Smith Hong Kong partner and head of technology, media and telecoms in Asia, Michelle Chan, told China Business Law Journal following the approval.
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