How to invest in prohibited or restricted industries

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clpstaff &clp articles

While China's economic reforms have taken the world by storm, many industries remain heavily restricted. Foreign investors do not have much time left to move into these markets through the popular variable interest entity (VIE) structure

When the Ministry of Commerce (MOFCOM) issued the Provisions for the Implementation of the System for Security Review of Acquisition of Domestic Enterprises by Foreign Investors (实施外国投资者并购境内企业安全审查制度的规定) in August last year, it caused much discussion among the venture capital and private equity communities. Many believe the Provisions have made it difficult for foreign investors to invest through the VIE structure, especially in the country's restricted or prohibited categories. However, there are still areas where the VIE structure is a viable option for investors, despite the Provisions.

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