A presentation on establishing Chinese enterprises through joint ventures, foreign direct investment and local venture capital investments. Part of a broader series of presentations and research I put together while studying at Shanghai University in 2009.

1. Presented by Meaghan Barbin

2.  China’s Recent Economic Status
 FDI and the “Suzhou model”
 Domestic Venture Capital
◦ “Wenzhou model”
 Enterprise to Progress the Economy

3. China swells to 3rd largest economy!

4.  1980s
◦ Incentives given to foreign investors
◦ Set up Special Economic Zones (SEZs)
 “Open Cities”
◦ Permit joint ventures using foreign capital
 Expectations of FDI
◦ Global recession means few are able to invest
◦ Is this the time to reform?

5.  1980s
◦ Industrial reforms allow new model of business
◦ Chinese production with foreign financing
 Suzhou welcomes foreign investment
◦ 2001-2005: Suzhou boasts US$20 billion
 Most of any city in China
 China totaled US$286 billion
◦ 2006: 16,000 companies run on foreign investment
 Poverty and pollution

8.  Economic stabilization and sustainable growth
◦ Less reliant on foreign direct investment
 Financial gains
◦ Profit at the point-of-sale
◦ Financial gains from ROI in Chinese companies

9.  2007: Enterprise Income Tax Law Adopted
◦ Domestic and foreign investment
 All companies will pay 25% tax rate
◦ "It marks the maturity and standardization of
China's economic system.”
 Minister of Finance, Jin Renqing

10.  Sources for Domestic VC:
◦ Government
◦ Large state-owned, cash heavy enterprises
◦ Private enterprises
 Wenzhou Donghai Venture Capital Limited Partnership
 Initial funds reaching RMB500 million

11.  Government
◦ Largest source of funding
◦ Funds are earmarked for economic guidance
 Regional
 Industry
◦ Rigid management and oversight limits profitability
 Private Enterprise
◦ Relatively small means
◦ Short-term focus on profits and control

12.  Independently run businesses
◦ “Biggest manufacturer of small-scale goods”
◦ Little government intervention, little FDI
 Private sector makes up 95%
 3rd highest disposable income in China
 Recession: entrepreneurs seek new enterprise
◦ RMB$140 billion of private capital to VC
◦ Real estate, mineral, cotton, stocks and energy

16. China must foster professional
domestic venture capital investments.
 Lack of VC management institutions
◦ VC firms finance and build business
◦ Successful entrepreneurs pursue other asset classes
 Stock market
 Real estate

17.  Suzhou vs. Wenzhou
 Corporate Taxation
 China Becomes 3rd
Largest Economy  Domestic VC Sources
 FDI  Domestic VC Sources
Chart
 Setting up in Suzhou
 Pollution and the
Huangpu River

19.  http:/www.france24.com/en/20090114-china-
becomes-world-third-largest-economy-overtakes-
germany-growth/
 News release upon China surpassing
Germany

20.  http://www.hiebs.hku.hk/working_paper_upd
ates/pdf/wp1049.pdf
 A paper on China’s FDI policies and how FDI
has affected China’s industrial growth

21.  http://www.chinaeconomicreview.com/cer/2
008_01/Setting_up_in_Suzhou.html
 Suzhou welcomes FDI
 General figures on Suzhou’s FDI

22.  http://www.who.int/water_sanitation_health/
resourcesquality/wpccasestudy2.pdf
 Case study of the sanitary conditions of the
Yangtze River basin.
 Includes maps of the Huangpu and Suzhou
River waterways.

23.  http://www.china.org.cn/english/government
/203171.htm
 Domestic capital on the same level as
foreign, with regards to corporate taxation
 China & the WTO

24.  http://www.zero2ipo.com.hk/china_this_wee
k/detail.asp?id=7230
 Much of domestic VC is expected to come
from Chinese government

26.  http://knowledgenetwork.thunderbird.edu/gl
obalcitizenship/2009/01/30/eyeglasses-
cigarette-lighters-and-italian-shoes-in-
china/
 Wenzhou is explored as a supplier and city of
entrepreneurship.

27.  http://www.zibb.com/article/4510961/Wenz
hou+Private+Capital+Eyes+VC+PE+Investme
nt
 Wenzhou’s private entrepreneurs move to
make more profits in the global recession