An offshore company refers to a limited liability company or a joint stock limited company established in the offshore legal field according to its offshore company regulations. The local government does not levy any taxes on such companies, but only charges a small amount of annual management fees. At the same time, major international banks recognize such companies and provide convenience for them to open bank accounts and financial services. It has three characteristics: high confidentiality, tax relief and no foreign exchange control.

Therefore, many high-tech and internet companies are registered as offshore companies because of their confidentiality and tax concessions or exemptions. The registration of major offshore companies is shown in the following figure:

The benefits or main purposes of offshore companies are: (1) conducting overseas red-chip private placement, and then listing in the United States, Hong Kong or Singapore and the United Kingdom; The curve circumvents the restrictions of foreign-restricted industries to conduct domestic operations, especially when foreign capital enters the Internet value-added telecommunications industry (TMT) in Sina mode (ie, contract arrangement/agreement control mode (VIE structure mode, that is, changing interest entity mode) through offshore company structure design; Cross-border mergers and acquisitions; Establish a holding company for capital operation; Tax planning, global trade, joint ventures, etc.

At present, there are many state-owned enterprises in China (such as Bank of China, State Grid, China Mobile, China Unicom, China Telecom, China Petroleum and China Offshore Oil). ) and almost all international venture capital and private M&A funds (IDG, Softbank, Safran Asia, Sequoia Capital, CDH Venture Capital, Huaping Investment Group, Goldman Sachs Group, Morgan Stanley, Walden International, Baring, Jifu, Intel, Zhihui). Draper Fisher Jurvetson (DFJ), Pukai, Northern Lights Venture Capital, Indus, Xiangfeng, Fidelity, Xinqiao, Blackstone, etc.) and many private enterprises (such as Yuxing, AsiaInfo, Sina, Netease, Sohu, Shanda, Baidu and recently Country Garden, SOHO, Alibaba, Giant Group and other famous private enterprises) are almost all established in offshore jurisdictions.