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Hi Fellow Fools,

Many investors aren't even aware of this particular risk factor, which is prevalent among China's elite tech stocks:

Investors have long been leery of the potential for foreign governments to introduce new regulations, seize assets, and otherwise interfere in the operations of a company. Examples that justify those concerns abound.


Potentially one of the greatest underlying risks when investing in China, however, is a common but controversial corporate structure that gets little attention in the West. This complicated legal agreement is the variable interest entity (VIE), often referred to as the Sina model, after Chinese online media company SINA Corporation (NASDAQ:SINA), which was the first to use the structure, in 2000.

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