China’s Plans for Venture Capital Champions

From the Financial Times:

"As reported by the Financial Times on Tuesday, the NDRC (National Development and Reform Commission), the country’s top economic planning body, has issued rules aimed at encouraging the formation of venture capital firms run by Chinese managers, funded by Chinese investors for the benefit of Chinese companies.

The carrot for the domestic equity firms is the NDRC’s “recommendation” that local governments provide tax breaks, loans and even direct investment.
Chinese venture capital firms would also enjoy less stringent financial and regulatory requirements than their foreign counterparts."

"The initiative – known as “Measure no.39” - has caused concern and disappointment among foreign private equity groups, which dominate China’s venture capital sector, and trade officials.

They are worried that the state initiative may skew the playing field towards domestic investors, reducing opportunities and returns for the foreign firm, which are looking to put an estimated US$5bn into Chinese companies in the next few years."

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