The VIE structures have received insufficient attention.

 As you observe, the public company does not actually own the VIE, which usually has most of the operations.

 VIE's came about in the internet industry, where China prohibits foreign investment. The early internet companies that listed in the US - Sina and Sohu, developed the VIE structure as a way around those rules. The ICP license is held by a Chinese company owned by Chinese members of management.  This company, and the management members, sign agreements giving management rights to the public company, and agreeing to pay any dividends they receive to the public company, and to sell the shares to the public company as soon as it is legally possible.  The public company loans the money needed to management, who contribute it to the VIE.  

The question has always been whether these agreements could be enforced in a Chinese court.  One requirement under Chinese law is that the indemnity agreement (where the shareholders pledge the stock to the public company) has to be filed with the government.   Baidu reports in its annual report that it did this on one VIE, but then the government would not record any further pledges.  

VIEs soon spread to many other areas that have restricted investment.  Education companies mostly use the VIE structure.  Now we see some companies using VIEs when there is no restriction on foreign ownership (See RCON).  In these situations it appears that management did not really want to give up ownership of the companies, but was willing to sign an agreement that a foreign company might have difficulty enforcing in a Chinese court.  A company recently tried to list in Hong Kong using a VIE structure.  Regulators rejected the listing, saying there was no need for a VIE.   The SEC, however, can't stop VIEs, they can only insist that the risks be fully disclosed.  They are, but most investors don't understand them.

The VIEs are incredibly tax inefficient, but the companies have managed that by keeping the profits of the VIE low - a situation that might be challenged under China's increasing transfer pricing enforcement.  

 The real risk with these deal is that the owner of the VIE (typically the CEO) has a falling out with the company and decides to take his VIE and go home.  There might also be some interesting times if the CEO of one of these companies dies and his kids inherit the VIE.   It will be an scary day for investors while the company tries to enforce an agreement in a Chinese court that was specifically designed to get around Chinese law. As long as the CEO is around and happy, it is not likely any problems will arise.