Regulators in China appear to be listening to investors concerns regarding offshore structures. Earlier in 2005, the Chinese State Administration of Foreign Exchange issued the Safe Notices, and investors have raised questions as to how the Safe Notices will affect venture capital and private equity technology investments in China over the long term. To date, investments have been usually made through creation of an offshore holding company into which Chinese and non-Chinese investors invest and that in turn holds, either directly or indirectly, an interest in a foreign invested enterprise (FIE). The primary requirement of the Safe Notices addresses registration of overseas investments. A Chinese resident who makes an investment outside of China to establish or control, directly or indirectly, an overseas enterprise must now obtain prior approval from Safe. Underlying FIEs in China must register for foreign exchange purposes, and, if they do not, may not be able to do foreign exchange related business, may face prohibitions on payment of profits by domestic enterprises in some circumstances, and may face punitive fines. The regulations are impractical unworkable in many areas. Early drafts of a new notice shows that Safe has heard the market's doubts. Registration will almost surely be required in the future, but Safe now seems to be taking a more pragmatic approach in which control is the focus, instead of prevention. Safe also seems to be amenable to the idea that offshore holding structures are needed for legitimate transactions.