The Internet, e-commerce and new media industry sectors in China are highly regulated, and foreign participation is restricted. There are many ways to structure a foreign-invested Internet business in China, including the variable interest entity, or “VIE” structure, which has been used by foreign e-commerce and new media companies seeking to enter the China market and by the founders of indigenous Chinese businesses seeking to raise capital outside China. In determining the optimum structure, foreign investors also must carefully consider the risks and implement a plan to protect their proprietary technology upon entering the China market.

This report provides a brief introduction to the state of the market for foreign investment in the Internet, e-commerce and new media industry sectors in China. Orrick has advised dozens of leading U.S., European and Asian companies in structuring and operating businesses in these dynamic sectors, and this report draws from our wealth of practical, on-the-ground experience.

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