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Title: Do country-specific factors matter? : entry strategies of foreign venture capitals and investment criteria of VCs in China
Author: Kang, Chung-Mai
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 2012
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Abstract:
Ever since IDGVC first established its venture capital fund in Beijing in the late 1980's, venture capitalists (VCs) have been debating whether US investment selection criteria should be revised for investments in China. On the one hand, those VCs with a foreign venture capital background, such as returnees (here referring to those Chinese with an educational background from a developed Western country) and foreign VCs believe that they can replicate their successful experiences of developed VC markets in China without too many amendments. On the other hand, local VCs claim that US practices do not suit China as they do not reflect sufficient knowledge and understanding of Chinese business practices. Twenty years on, the debate still shows no sign of abating. Indeed, investment competition between foreign VCs and Chinese VCs remains as intensive as ever (Zero2IPO Research Centre 2006). In the last two years, China has experienced progressive development in its venture capital presence internationally, largely due to the diversification of industries and companies attracting investments. The segments enjoying remarkable growth include high-tech enterprises as well as such industries as the construction, hotel and leisure, and retail segments. Several other sectors are also attracting increasing attention for VC investment, including outdoor media, green technology and innovations, online education and supplementary schooling, software start-ups and the hospital care system. Cleantech innovation is especially growing as the country rigorously explores solar power generation, new materials and clean production, seeking to ameliorate its water and air pollution, which far exceeds Western safety standards. The market has also matured significantly. Concerns about whether foreign investments would only serve to enhance the personal interests and pocketbooks of the local population, as opposed to enhancing the development of the investments, have subsided. The continuous growth of the Chinese economy and the middle class has also helped to prioritise innovation and attract foreign investment to China. Notably, in the past most economic improvements came from government-led programs; this trend is beginning to dissipate as growing numbers of foreign financiers come to see China's VC and PE market as a promising growth opportunity. No doubt the PRC's government will continue to create barriers to unlimited foreign investment in China, but many of the other factors that once hindered foreign investment into the country have become much more manageable. This thesis has its roots in the debate above and draws upon the background and experiences of the researcher in the field of venture capital. The researcher has over six years experience as an investment manager in listed companies in Taiwan and for three years served as managing director of Zero2IPO Research Centre, a leading venture capital and private equity research institute in China. The researcher has a wealth of personal contacts with VCs in China and this has proved invaluable in being able to conduct the empirical study that forms the basis of this thesis. In addition, as a Taiwanese expatriate, the researcher also has the advantage of conducting this study in the Chinese language in addition to having a comprehensive knowledge of both Chinese and Western venture capital practices.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.726464  DOI: Not available
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