What's the difference between vie architecture and red chip architecture?

The difference between red chip structure and vie structure lies in the different control methods. The red-chip structure is that domestic natural persons (actual controllers) indirectly control domestic actual operating companies through the establishment of overseas companies (SPV), with SPV as the main body of overseas listing financing. Vie structure is the actual domestic business entity, which is controlled by overseas listed entities through agreement, that is to say, vie structure is directly owned by domestic natural persons (actual controllers) with more than 50% equity.

In this regard, we basically understand that the main difference between vie structure and traditional red-chip structure is that the wholly foreign-owned enterprise in China under the red-chip model is a shell company, and vie is directly owned by domestic natural persons (actual controllers) with more than 50% equity, so the latter has much greater control than the former.

At the moment of the development of financial market, many company bosses are trying to dismantle the red-chip structure and drive the controlling stake with vie structure, so the red-chip structure we may see in the future has become history.

Extended data red chip structure refers to the structure in which companies in China (excluding Hongkong, Macau and Taiwan Province Province) set up companies overseas, and then inject or transfer the assets of domestic companies to overseas companies to achieve the purpose of overseas listing and financing of overseas holding companies.

VIE structure (literally translated as "variable interest equity") is a kind of structure for domestic enterprises to indirectly achieve the purpose of overseas listing, and it belongs to a kind of red-chip structure.