VENTURE CAPITAL IN CHINA

Venture Capital in China

Venture Capital in China

Development of China's Venture Capital

The venture capital funds grew steadily in China in 2008, according to a report by the consulting EZCapital and Holyzone. That same year saw the entry of 91 new funds in the market, marking an annual increase of 57 percent over 2007. The new funds raised 264,000 million Yuan (U.S. $ 37,700 million) in 2008, equivalent to a 347 percent increase over 2007, reported Monday's China Daily. According to the report and Holyzone EZ Capital, most of the new funds were denominated in Yuan (Chinese currency), while only 33 percent were denominated in U.S. dollars. (Cyert, 1963, pp.103-115)

These figures were the result of government efforts to promote the development of venture capital in China. China's government approved new regulations that provide favourable conditions for development to local funds and enable progress in the creation of a trading market for emerging companies, the report said. However, the majority of funds in Yuan are relatively small with a mean value of 672 billion Yuan, equivalent to one ninth of the value of funds in U.S. dollars, according to the report of the consultancy. The venture capital funds foreigners have long played a key role in the investment value in China. Preferred sectors include information technology, new media, and telecommunications and semiconductor devices. (Chen, 2002, pp.35-53)

It's been a couple of decades; Margaret Thatcher asked the opinion of China and Russia from one economic analyst regarding foreign investment, during her official visit and in response he replied. "The difference is that Russia is a capitalist economy populated by and China is a communist economy populated by capitalists. He thought about Russia more but he was clear that the diagnosis made about China was pretty accurate. He believed they are moving forward on the right and left developments in the last twenty years which has been spectacular. Although they are not without problems (internal imbalances, etc). In the centre of this development is the culture of Entrepreneurship and sacrifice for the work of individual Chinese. (Child, 1994, pp.55-60)

Obstacles in the venture capital industry

This economic expansion has been reflected in all areas of activity, such as industry, commerce and services, including financial services. The venture capital could not be an exception and the sector's growth in China is still spectacular, although most of that activity has not been all that visible. The latter reflects the fact that the industry understood "the use" (independent managers of institutional funds channelled international investment), is relatively new there: venture capital has been for years, but through direct investment by companies and employers- domestic and foreign options have been there by the government. (Zeira, 1990, pp.7-22)

In fact, recent regulatory reforms introduced in China to boost venture capital "institutional" (the funds channelled through) seem to be complicating rather than facilitating the entry of foreign capital for venture capital in the country, while that, in parallel, are accelerating investment in the sector in the country of Chinese institutional investors ...