By  Zeng Xianwu Bai Lihui King & Wood’s Foreign Direct Investment (FDI) Group

To achieve the initial public offering ("IPO"), there are two options for Chinese companies, onshore listing (also known as A-share listing) and offshore listing (also known as red-chip listing).  Since the conditions and qualifications for A-share listing are usually a little higher and the procedure is more time-consuming than for the offshore listing, Chinese companies which cannot meet the A-share listing’s requirements or which need to complete IPO rapidly, usually would prefer the red-chip listing.  For the red-chip listing, there are two commonly-used structures for Chinese companies: the straight-forward offshore listing structure and the VIE structure.  In addition, for the purpose of attracting foreign investors and for circumventing restrictions on foreign direct investment, during the Pre-IPO restructuring, the VIE structure is also widely used by Chinese companies and foreign companies alike.

In 2011, after a series of public events, the variable interest entity ("VIE") structure re-attracted a lot of attention and concerns from the PRC authorities, entrepreneurs, investors and other market participants.  This essay will describe the circumstances in which the VIE structure was created, how it has been used and the changes in the regulatory environment which might affect the feasibility of utilizing the VIE structure.


Continue Reading Variable Interest Entity Structure in China

By Richard W. Wigley of King & Wood’s Dispute Resolution Group

Data privacy for internet users is a topic of concern the world over, with the P.R.C. being no exception. Internet information service providers (hereinafter also referred to as "IISPs"), such as commercial websites, regularly collect information from online visitors, sometimes with full knowledge of the visitors and sometimes unknown to the visitors. In addition, IISPs have been known to maliciously introduce software incompatible with the user’s existing software, install certain software such as "spyware" onto users’ computers/mobile devices and/or change users’ browser configurations without permission, and it goes without saying that "pop up ads" are an ongoing online annoyance. As online users in the P.R.C. look for protections from such unwanted invasions of their privacy and restrictions upon user control of their online experience, the recently released "Several Provisions on Regulating the Market Order for Internet Information Services" (hereinafter referred to as the "Provisions") provides needed rules and regulations in this regard.[1]  


Continue Reading New M.I.I.T. Provisions Provide Additional Online User Control and Data Privacy Protections

By Susan Ning and Yun Wang

On 29 December 2011, the Ministry of Industry and Information Technology ("MIIT") finally promulgated the Various Provisions on Regulating the Order of Internet Information Service Market ("Rules").  Viewed by many as been driven by the QQ/360 disputes in late 2010, the Rules mainly set out the code of conducts for an internet information service provider ("IISP") vis-à-vis its competitors and consumers. The Rules also create a dispute resolution mechanism between IISPs.


Continue Reading MIIT Finalizes Rules Governing Competition in Internet Industry

By Susan Ning and Yin Ranran

On 27 July 2011, the Ministry of Industry and Information Technology ("MIIT") issued for public comments draft rules entitled Provisions on Administration of Internet Information Services (Draft for Comments) ("Draft Rules").

The Draft Rules are based on an earlier draft entitled Interim Rules for Supervision and Management of Internet Information Service Market ("Interim Rules") released by MIIT on 12 January 2011.1   The Draft Rules mainly set out the code of conducts for an internet information service provider ("IISP") vis-à-vis its competitors and consumers.
 


Continue Reading MIIT Issues Revised Draft Rules Governing Competition in Internet Industry

By Susan Ning and Yin Ranran

On June 30, the Ministry of Industry and Information Technology ("MIIT") issued the Opinion on Regulating Conducts of Basic Telecoms Enterprises on College Campuses ("MIIT Opinion").  The MIIT Opinion governs specified conduct by basic telecom enterprises1  -in relation to unfair competition issues within college or university campuses.


Continue Reading MIIT Issues Guidance to Maintain Fair Competition Order among Basic Telecom Operators on College Campuses