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CNN World Report

International Investment Boosts China's Industrial Sector

Aired July 15, 2001 - 14:14   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ASIEH NAMDAR, CNN ANCHOR: Internationally-funded companies are now allowed to have listings on Shanghai stock markets. The move announced this week is expected to boost overseas investments in China. The latest government statistics show in the first half of this year, the country's industrial sector will rule by 11 percent over last year's same period, multinational companies contributed the lion's share to this growth. Beijing Television has more.

(BEGIN VIDEOTAPE)

SHEN LAN, BEIJING TELEVISION CORRESPONDENT (voice-over): As the Internet became the core of China's new economy last year, a huge amount of foreign venture capital flowed into Chinese dot-com companies. The returns on investment proved disappointing to many, as prices on such Nasdaq stocks as (UNINTELLIGIBLE) headed south after their IPOs. Venture capitalists began losing some of their initial optimism.

UNIDENTIFIED MALE: I think it's taking American venture capitalists and investors time to understand and learn the China market. When there was the first wave of investors coming into China two or three years ago, quite honestly, I think there was a bit of arrogance, that because we're from Silicon Valley and we have all this success, we know how to do things.

But now, I think over time, they see that China is a different market, different culture, different society, and there needs to be a mutual sharing of information back into China and then learning from the China marketplace, so I think the investors are becoming much more savvy.

SHEN: Technology Venture Investment was the first foreign venture capital firm in China. (UNINTELLIGIBLE) investment here over the past three years reaching $150 million U.S. How does it compare to the Chinese market with America's?

UNIDENTIFIED MALE (through translator): The previous generation of our colleagues believed that you finished your task once you finished the investment for an enterprise. From the venture capitalist standpoint, you had made your assessment and done whatever you could. No matter how much you may want to be involved in managing the enterprise, it was not going to happen. They said it would be like trying to row a small boat upstream in flood season, but that concept won't work here in the Chinese market. UNIDENTIFIED MALE: The biggest difference I see when it comes to the venture capital is exit strategy. You know, the biggest thing that have fueled the U.S. venture capital to be so immense is the public markets. From 1997 to 2000, over 400 companies go public, so there is great return on investment. But if I compare that to a China market, it's much more difficult to go public.

SHEN: Experts say that a reasonable return on venture capital investment will result from a practical application of the VC concept that is tailored for the Chinese market.

UNIDENTIFIED MALE (through translator): We have helped our enterprises in that we made investments and found more than 40 senior managers. Also was the (UNINTELLIGIBLE) continuous financing. We use our relationships to help seek strategic partners prepare for their IPO and so on. These activities are far beyond those of venture capitalists in developed countries.

SHEN: China's market continues to open, and investors are gaining experience. They are learning that although this ball game may have slightly different rules, they can still hit a home-run.

This is Shen Lan of Beijing TV for CNN WORLD REPORT.

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