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Venture capital drives small-and-medium enterprises

(Shenzhen Daily)
Updated: 2010-11-18 14:31

Venture capital can be an important driving force for the development of innovative small-and-medium enterprises in China, experts said on Nov 16 at a forum on venture capital investment.

Part of the ongoing 12th China Hi-Tech Fair, the forum was attended by venture capitalists, government officials and economic scholars.

"There are insufficient capital investments on small-and-medium enterprises, which have dragged their development," said Xiu Xiaoping, director of the high technology industry development center of the Ministry of Science and Technology.

Xiu said the government should guide venture capital enterprises, which are seeing a rapid and robust development in China, to invest on innovative small-and-medium enterprises with growth potential.

The ministry has set up a "guide fund" to encourage venture capital enterprises to inject money into small-and-medium enterprises.

 More than 800 million yuan have been subsidized to venture capital enterprises and venture capital management enterprises which have investments in small-and-medium enterprises, said Xiu.

On the other hand, small-and-medium enterprises should actively seek venture capital investments to boost their own development, said Jing Haitao, chairman of Shenzhen Venture Capital Association and Shenzhen Capital Group Co Ltd.

"Small-and-medium enterprises should not only depend on 'self accumulation' from profits to move ahead.

They should also learn to make use of venture capital to achieve a further development," Jing said.

There are more than 10 million small-and-medium enterprises in China, accounting for 99 percent of the country's enterprises, according to Jing.

Jing said that, besides small-and-medium enterprises, start-up enterprises, enterprises in a time of transformation and upgrading, and hi-tech manufacturing enterprises can be beneficiaries of venture capital investments.

Song Hai, vice governor of Guangdong province, said the provincial government will encourage enterprises in the province, especially those with venture capital investments, to get listed on the growth enterprise market (GEM) board and small-and-medium enterprises board on the stock market in Shenzhen.

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"The province will give preferential policies to facilitate the transformation and listing of enterprises, providing 'excellent resource' to venture capital enterprises," Song said.

A total of 137 enterprises had been listed on the one-year-old GEM board in Shenzhen by the end of October, according to the Shenzhen Venture Capital Association, which has 288 member enterprises.

More than one third of the listed enterprises on the GEM have venture capital investments from venture capital enterprise in Shenzhen.

"Government should play a role as a guide instead of a dominator in the development of venture capital industry," said Chen Yingchun, vice mayor of Shenzhen.

Chen said the city government will spare no effort to attract more venture capital enterprises and venture capital management enterprises to Shenzhen.