I have Tencent in HKD, Alibaba both HK and ADR and Baidu and JD ADR.

It is important to understand the difference between an ADR and a VIE.

An ADR can be thought of as a share in a trust which owns actual shares in the underlying company. In extremis, the underlying shares could theoretically be distributed to ADR holders. They may or may not be listed on a convenient exchange, but there are actual shares backing up your ADR.

This is emphatically NOT the case with a Chinese VIE. In certain business sectors (in practice, most of the interesting ones), it is flatly prohibited under Chinese law for a non Chinese person to own the shares, and that includes indirectly. A buyer of BABA, for example, is not a shareholder, directly or indirectly, in the well known Chinese operating company of that name, period. Nor does the BABA holder own shares in a company that owns shares in that Alibaba. Rather, one merely owns shares in a Caribbean company that has a contract with the "real" Alibaba to share profits. This is a creative workaround, but it is of extremely tenuous enforceability, and its legality under Chinese law has never been tested. (not that a precedent would mean anything).

So delisting is not the risk here. The risk of the VIE is that you have no ownership in the company at all, directly or indirectly, and that "share the wealth" contract is good only so long as someone's whim wishes it to be good.

This is not a problem for all Chinese firms trading outside China, as it depends on the sector...whether the CCP considers it strategic. For example, I think BYD shares trading in Hong Kong are real shares of BYD, not VIE units.

That is just a discussion of risks related to the VIE structure. There are many other jurisdiction and governance risks. BABA holders have already been screwed out of (say) 20-40% of the company's value three times by my count. But people still buy the BABA paper. Fool me thrice?

Jim