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The Role of Variable Interest Entities (VIEs) in China's Economic Development and Regulatory Landscape

In: Proceedings of the 2025 5th International Conference on Enterprise Management and Economic Development (ICEMED 2025)

Author

Listed:
  • Taiyu Yiu

    (Shanghai American School Pudong)

Abstract

This article will delve into the special structure of Variable Interest Entity (VIE), which is widely used in the business field in China. The VIE model provides an effective way for domestic companies to obtain foreign investment when facing strict local regulatory restrictions. Over the years, the VIE structure has played a key role in driving the flourishing development of major technology companies in China, helping numerous enterprises achieve rapid expansion and innovation. However, with its widespread application, VIEs have also raised a series of significant legal and financial issues, such as contract dispute risks and regulatory challenges caused by opaque information disclosure. This article will use Alibaba as a typical case study to conduct a detailed examination of the structural characteristics, potential advantages, risks faced, and potential impacts on the future business and regulatory environment of VIEs. A deep understanding of the VIE structure is of crucial importance for policy makers, investors, and companies themselves in responding to the constantly changing regulatory environment.

Suggested Citation

  • Taiyu Yiu, 2025. "The Role of Variable Interest Entities (VIEs) in China's Economic Development and Regulatory Landscape," Advances in Economics, Business and Management Research, in: Prasad Siba Borah & Norhayati Zakuan & Nazimah Hussin & Azlina Binti Md Yassin (ed.), Proceedings of the 2025 5th International Conference on Enterprise Management and Economic Development (ICEMED 2025), pages 809-815, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-811-0_87
    DOI: 10.2991/978-94-6463-811-0_87
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