Private Equity in China: The 'Cautious' Gold Rush



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Code : BSM0018

Year :
2005

Industry : Banking, Insurance and Financial Services

Region : China

Teaching Note:Not Available

Structured Assignment :Not Available

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Abstract: Over the years, China has emerged as a preferred destination for global private equity investors. During the early 1980s, the Chinese government had made efforts to nurture this concept but failed owing to pitfalls in policies and scarcity of resources. The China New Technology Start-up Investment Company, the earliest private equity firm in China, was founded in 1986 and functioned as a central government agency to give a boost to 'private equity' in China. However, this venture went bankrupt in 1997. Such failures led to the formulation of the tentative regulations on venture capital in China in 2001. These rules were however modified in 2003 in order to improve the sluggish flow of global capital. Private equity capital was administered in sectors like information technology, the semiconductor industry, biotechnology and even in banking after the relaxation of banking norms in 2003. However, global private equity players took a cautious approach due to the lack of transparency in the accounting practices of companies, underdeveloped stock exchanges and stringent regulatory norms for foreign listing.

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Pedagogical Objectives:

  • To discuss the scope of private equity investment in China in different sectors
  • To discuss the plans and strategies adopted by global private equity players in different sectors.

    Keywords : Private equity, Market-oriented business system,Government and Business Environment Case Study, China New Technology Start-up Investment Company, Stock exchanges, New regulations, MOFTEC (Ministry of Foreign Trade and Economic Co-operation), Changing investment environment, Goldman Sachs, Shanda Networking, The investment boom, China Securities Regulatory Commission, Shanghai Technology Stock Exchange, Startup Enterprise Development Scheme (SEEDS), Major foreign firms

    Contents :
    The Dawn of Private Equity
    The Changing Investment Environment
    The Happening Investments


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