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© 2022 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.

Abstract

This article aims to show how the globalized securities market in general and a transnational legal business structure named variable interest entity (VIE) in particular has challenged our conventional understanding of “foreignness” as a geographical concept in cross-border capital flow and ushers in a new type of foreign investment which I call “offshore domesticated foreign finance” (ODFF). By performing a case study on Alibaba—one of the world’s leading VIE-structured Internet companies—and mapping out the company’s fund-raising history and personnel appointment mechanism with the help of company releases and news reports, this article shows how ODFF makes a company de jure foreign-incorporated and -owned but de facto China-based and Chinese-controlled. This article also demonstrates that ODFF’s primary function is to allow China-based Internet firms to tap into international financial markets while helping Chinese entrepreneurs and managers—despite their minority shareholdings—to control the company. These findings shed light on how financial globalization has transformed the cross-border capital movement and corporate governance.

Details

Title
Variable Interest Entity, Offshore Domesticated Foreign Finance, and the Political Economy of China’s Internet Firms: The Case of Alibaba
Author
Zhao, Can
First page
99
Publication year
2022
Publication date
2022
Publisher
MDPI AG
e-ISSN
20760760
Source type
Scholarly Journal
Language of publication
English
ProQuest document ID
2642464199
Copyright
© 2022 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.