A huge interest in Variable Interest Entities (VIEs) used by publicly traded Chinese companies led to the discovery of a very clearly written article by Ballard Spahr lawyers M. Norman Goldberger and Laura E. Krabill. “One additional risk factor in investing in Chinese companies is that the use of a reverse merger is often accompanied by the creation of a variable interest entity (VIE),” the two wrote. “VIEs allow the public company to gain control of a private Chinese company and its assets through a series of contractual arrangements, rather than through a strict parent-subsidiary relationship or direct ownership of the operating Chinese company or its assets.”