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Technology Stocks : Baidu (BIDU)

BIDU 123.82

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Dec 19 9:30 AM EST

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To: manalagi who wrote (1578)	9/29/2011 12:50:35 PM
From: tom pope	of 2098

VIE's may be part of the problem A complex corporate structure that has long been used by companies in China to tap overseas capital markets may give pause to U.S. investors stung by the recent Chinese "reverse-merger" scandal. So-called variable interest entities have come into focus this month following reports of a possible Chinese-government clampdown on their use. A VIE structure involves a series of complex contractual agreements often used in industries where foreign ownership is restricted or prohibited. The method is a means of complying with the letter of Chinese law while also permitting foreign shareholding. VIEs have been widely used for years, but until recently the structure had been little known among U.S. investors. VIEs are employed heavily in China's highflying technology sector, including by well-known Internet companies Sina Corp. and Baidu Inc. A recent Peking University analysis said that the structure is used by more than half of Chinese companies listed on the Nasdaq. VIEs are "part of every Chinese Internet company listed overseas," according to an analysis last month by investment bank Macquarie.

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