1. control mode: the red-chip structure usually involves injecting or transferring the assets of domestic companies to overseas companies, and then listing and financing overseas through this overseas company. VIE framework does not directly own the equity of domestic business entities, but controls domestic enterprises through a series of contractual arrangements.
2. Ownership structure: In the red-chip structure, domestic natural persons (actual controllers) may not directly hold a large proportion of the shares, while in the VIE structure, the actual controllers will directly hold more than 50% of the shares, which makes the VIE structure more powerful than the traditional red-chip structure.
3. Legal risk: The key of VIE structure lies in controlling Chinese mainland enterprises through complicated contractual arrangements and avoiding legal restrictions on foreign investment access. This method may face the risk of insufficient protection of contract arrangement in China law. The red-chip structure needs to consider cross-border tax planning and acceptable registration places of listed entities.