Postscript to China VC Forum: Jonnson Yinya Li Reports from Shenzhen

Filed in archive Conferences on April 11, 2006

Jonnson Yinya Li, author of Investing in China, the Emerging Venture Capital Industry, Director of GBVC China Ltd., and Senior Research Fellow of Renmin University of China has provided CVN with these insightful observations from the recently held 8th Annual China Venture Capital Forum in Shenzhen.

Cheng Siwei, deputy chairman of the Standing Committee of the NPC,
Keynote speech, elaborated on the differences between domestic and foreign VC/PE, and introduced the role of government in China's VC/PE development. Here are some of those key highlights:

* VC/PE has increased over the last 3 years. In 2003(based on 180
survey samples) there was RMB 32.53 billion in capital, with foreign investments accounting for 5 percent. In 2004, in data sampled from 141 venture firms revealed RMB 43.87 billion raised, with the foreign capital share rising to 15 percent.

* In 2005, based on a survey of 150 venture firms,
China's raised funds totaled RMB 46.45 billion, with foreign capital taking up almost 33.9 percent.

* Since the SME board of the Shenzhen Stock Exchange opened two years ago (May 2004), 50 SMEs have been listed with 38 private enterprises and 33 high tech enterprises with the average amount of raised capital at RMB 240 million.

Professor Mannie Manhong Liu, the director of VC/PE Research Institution of Renmin University and chairwoman of VCChina Ltd. reaffirmed that China is in a new spring of VC and PE growth.

China is now the second most invested country after the US.
Liu's comments were supported largely by China's series of reform policies from last fall through March of this year. Liu, along with Dr. Gongmeng Chen of the China Venture Capital Research Institute, have both proven to be skilled and influential policy shapers.

As a result of these reforms, Silicon Valley VCs have established more than 30 new China VC/PE funds. This increased development of Chinese SMEs is attracting more VC/PE investors.