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Cheng Siwei delivers keynote speech

By Li Huayu (chinadaily.com.cn)
Updated: 2006-04-08 09:49

At 2006 China Venture Capital Forum that opened on April 7 in Shenzhen, Guangdong Province, Cheng Siwei, vice chairman of the Standing Committee of the NPC, delivered a keynote speech, in which he briefed on the development of China's venture capital (VC) industry in the past three years, elaborated on the differences between domestic and foreign VC, and introduced the role of government in China's VC development.

He said, the China Venture Capital Research Institute surveyed 180 venture firms in China in 2003, which altogether raised 32.53 billion yuan in capital, with foreign investments accounting for 5 percent; in 2004, the 141 surveyed venture firms raised 43.87 billion yuan in total, with the share of foreign capital rising to 15 percent; while in 2005, it surveyed 150 venture firms, which raised 46.45 billion yuan in total, with foreign capital taking up 33.9 percent.

He said, in the past three years, 83 percent of foreign VC was invested in Beijing, Shanghai and Shenzhen, with the percentage of foreign VC in these three cities being 71.2, 63.6, and 25.4 percent respectively. The amount raised and invested in the three cities takes up 50-60 percent of the total VC in China.

Currently there are 183 Chinese enterprises that have sought initial public offerings (IPOs), with 139 (76 percent) listed in foreign capital markets (excluding Nasdaq), 40 (24 percent) listed in domestic capital markets and 25 listed in Nasdaq, he added.

Since the Shenzhen Stock Exchange was opened on May 28, 2004, 50 small- and medium-sized enterprises have been listed there, with 38 private enterprises and 33 high-tech enterprises, and the average amount of capital they have raised is 240 million yuan, according to Cheng.

In terms of the role of government, Cheng suggests that the government should "support but not control, lead but not interfere" in China's VC development. He said the country has seen some progress in legislation in the past few years and in 2005 it revised the Company Law and the Securities Law.

VC fund is private equity fund and should be raised privately, and conditions for legislation of private equity fund is getting mature in China, Cheng said. "Limited partnership is under consideration in the revised draft of the partnership enterprise law."

He concluded his speech by saying "Although we still have a long way to go, we are on the right track. As a prudent optimist, I believe opportunities are larger than challenges. And, in the future, the government should play a more important role in the development of China's VC business."