Strictly, a loophole

Author: | Published: 1 Oct 2007

This is the second part of a two-part article. The first appeared in the September 2007 IFLR

If the China Unicom CCF (China-China-Foreign) investment debacle represents a dramatic failure of the CCF structure, then sina.com and sohu.com represent a more successful version of essentially the same structure. What made the difference? Cynics would say that it is because Chinese regulators do not want to interfere with the fundamental structure of a high-profile listed company in China, for fear of upsetting investor sentiment towards all Chinese public companies listed internationally.

And in this case the cynics would in large measure be right. If Chinese regulators were to tamper with the CCF structure of a couple of high-profile public companies, the global press would paint them as having no respect for the rule of law, and international investor confidence in Chinese listed companies would plummet. No one wants to be...