In this week's Red Herring issue, Jeremy Xue, the managing director of Beijing- based Tsinghua Science Park Venture Capital, an affiliate of China's prestigious university knows that the domestic venture capitalists and even the foreign VCs are risk adverse and sums it by saying that when it comes to supporting entrepreneurs, "there is a lot of talk but no action."

Xue goes on to indentify specific reasons why most Silicon Valley VCs are still misguided and often misinformed in their attempted China due diligence:

Kanbujian. VCs simply don't see the deals because they are difficult to find.

Kanbuqi. VCs don't take the deals seriously because they are often too small.

Kanbudong. Foreign VCs fail to understand the deals because they (the deals) are too Chinese.

As is often the typical American or rather Silicon Valley approach, the VC jets into the Middle Kingdom mid-week and expects to be flooded with deals before the end of the week. Additionally, the investors dismiss small tech deals because they cannot justify the extraordinary attorney fees.

The final excuse for not investing in Chinese tech companies is simply fear. Sandhill Road, home to the largest concentration of VCs don't understand the language, culture and ultimately the level or role played by government influence.

In the Red Herring article, WI Harper's David Zhang has this advice for Western-based venture capitalists who want to invest in China: "If you want to make money in China, you cannot take the short-term, fly-by Commando approach and try to manage remotely. If you do, you will get burned and lose your money."