Steve Dickinson in MarketWatch

Steve Dickinson, a lawyer with Harris Bricken in Seattle who specializes in working with foreign companies operating in China, said that investors in the holding companies in the Cayman Islands will eventually tire of the situation, under which all the cash is sent to China, and will demand returns. But, he said, any such attempts by investors to seek funds from the so-called WFOE will be unsuccessful.

“In terms of investment, there is not one single Chinese entity that is listed outside of China in ADR or on the H.K. [Hong Kong] exchange that has a clean, legitimate set of books. Investment in any Chinese entity is therefore made at a 100% level of risk,” Dickinson said, adding that he would not even call these vehicles an “investment.”