Its my understanding that a WFOE is not a Chinese invention. Many countries can be strict about foreign investors/owners as they feel there needs to be a local

Its my understanding that a WFOE is not a Chinese invention. Many countries can be strict about foreign investors/owners as they feel there needs to be a local citizen that holds legal liability. China is very pragmatic in these areas of the law. They are not interested in chasing owners around the globe to haul them into China court. This thinking extends to why only a fully owned Chinese entity (not a WFOE) can hold a license to run a web server and own a domain name. I'm not defending the position. But thats the rational. Your observation that many Chinese see deals as a zero sum game is on target. Most do not believe in win-win situations as they have no history of seeing such things.