Have you already hear about the Alibaba, a Chinese company that operates online, being listed in the US? Were you surprised that a Chinese company can be listed in the US? Well, it is not the first time a Chinese company was listed overseas. There were already a number of Chinese establishments that were listed overseas before the issue of Alibaba. Are you curious to know how these companies did it?
Alibaba and the other Chinese companies listed overseas use the Variable Interest Entity or the VIE in order for them to get listed abroad. VIE works with a 100% Chinese-owned company that signs a service contract in order to a certain foreign-owned onshore company the revenue and even the operational control of the business without disrupting the rights of ownership. With VIE, the onshore foreign-owned company is considered to be a subsidiary of the offshore holding enterprise that is the one listed.
If Alibaba gets listed in the US, this might be the biggest initial public offering or IPO in the United States. The floatation is anticipated to play from $15 to $25 billion. Therefore, it has the potential to even surpass the record of Visa of $17.9 billion launch back in the year 2007.