May 10 2008
private equity and venture capital in china
Review time again as usual. Most interesting business article for the week comes from Seeking Alpha entitled “Progress or Pipe Dreams? Private Equity / Venture Capital in China.” ( h/t to China Law Blog) Well, its not really an article: it is a panel discussion from some people who know the industry better than most others. Here is what Dan Harris at China Law Blog said:
Project Alpha just posted the transcript from a very enlightening panel discussion on private equity/venture capital in China. The discussion was at JP Morgan’s recent China conference in Beijing. I attended this discussion and found it very informative.
Shaun Rein (Managing Director, China Market Research Group) did an excellent job moderating the discussion between Robert Theleen (CEO, ChinaVest); Joel Kellman (Managing Partner, Granite Global Ventures), and Brandon Lin (Partner, SAIF Partners).
If Dan thinks its a must-read, it probably is. Here are some excerpts I found interesting from the discussion:
Bob Theleen: At local, municipal and regional level, government is very much supportive of the PE industry. At national level things become more complex for the reasons you mention.
On the other hand the contradiction is there is not a mayor or a governor that I have ever met that does not say, my city needs capital; it needs growth capital and I want to support local entrepreneurs. Since the covenant of Beijing with regional government is you are more on your own, that regional government has to fend for itself. I think you will find that contradiction, that Beijing has to accommodate local government and it has to accommodate and support the PE industry, but how do you separate that out from issues like controlling the aggregate capital in a high-inflation market? That is a problem that China faces.
* * *
Shaun Rein: Is it hard right now for entrepreneurs to get capital?
Bob Theleen: I think it is very hard. It is harder because of credit tightening.
The good news is that our regional city banks are providing more and more debt. The aggregate savings of China, pools of RMB are accessible today through trust companies, through other financing sources. But that is an important component of making all of those kinds of business strategies effective.
Good stuff and worth a read. It reads pretty quickly.
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey