| "> | | | | developing of the growing SMEs and private |
| According to the report of TRI.TO | | | | enterprises; to offer Pre-IPO support for Chinese |
| TRI.Nï¼the global news and information | | | | enterprises before they becoming a listed enterprise; |
| providerï¼on July 7th , Chinese enterprises | | | | to join the reorganization of corporations and banks. |
| have attracted 2.6 billion dollars Privately Offered | | | | In the wave of the reform and privatization of |
| Fund Investment in the first half of this year, which | | | | state-owned enterprise, the restriction on PE |
| accounts for 36 per cent of the total Privately | | | | investment is loosening. There are possibilities that PE |
| Offered Fund Investment in Asian and Pacific region | | | | investment may develop into obtaining control from |
| and China has got the maximum benefit from | | | | minority stake investment. Furthermore, it is a good |
| Privately Offered Fund in Asian and Pacific region | | | | choice for PE investing in the bad loans and real |
| ex-Japan. Private-equity Investment carries a great | | | | estates. |
| financial support for Chinese Small and Medium | | | | There are three main organizational forms of PE |
| Enterprisesâ financing. Many policies, laws and | | | | investment in China: trust system, limited partnership |
| directives have been set in place by Chinese | | | | and the company style among which the trust plan is |
| government to encourage Private-equity Investment. | | | | the typical style of YANGGUAN PE . The |
| Private Equity, (hereinafter as | | | | âPRC Partnership Enterprise Lawâ |
| âPEâ), means to make an equity | | | | has become the legal guidance for the establishment |
| investment in private enterprises (namely unlisted | | | | and operation of PE. The strategy is more flexible for |
| enterprises) by private form, and during the | | | | corporate-style PE and the operation must be more |
| transaction process, exit strategies are took into | | | | formal and standard under the framework of |
| consideration, that is, to sale shares to get profits | | | | corporation. |
| through listing, merger and acquisition, buy-back form | | | | Laws in China Encouraged foreign merchants to |
| by strata of management, and so on. In China, PE | | | | invest venture enterprises. A lot of preferential tax |
| mainly refers to the Private-equity Investment of the | | | | laws applied to foreign capital have been enacted. |
| mature enterprises that have formed a certain scale | | | | Venture Investment Enterprises may take the |
| and had a steady cash flow. | | | | organizational form of a non-legal person entity or a |
| After accession to WTO, Chinaâs retail | | | | company. Moreover, more and more PEs set up |
| trade, financial industry and telecom industry etc. | | | | offshore company to evade tax or register a hi-tech |
| have been open to foreign and private capital. As | | | | company to enjoy the preferential tax policy at tax |
| one member of the BRICs, the sustained and rapid | | | | havens. |
| growth of Chinese economy contains a huge | | | | Capital Market in China is improving day by day, and |
| opportunity for investment. With the development of | | | | PE withdrawal mechanism is being improved too. The |
| the economy, Chinaâs infrastructure | | | | establishment of SME Board in May 2004 was |
| construction is strengthening gradually, the | | | | regarded as a prelude to the Growth Enterprise |
| information level is increasing greatly and the hard | | | | Market(GEM). October 23rd, 2009, GEM opening |
| environment for investment is perfecting. With the | | | | ceremony was held in Shenzhen Stock Exchange, |
| revising of Company Law of the Peopleâs | | | | which provided a normal withdrawal mechanism for |
| Republic of China and Securities Law of the | | | | PE. China encourages small and medium sized SOE |
| Peopleâs Republic of China, the legal system | | | | carry out MBO(management buy-outs). Also, that is a |
| is improving gradually. That the rapid development of | | | | good way for withdraw of PE. |
| Chinaâ economy and the improving of the | | | | In conclusion, the fast development of China provides |
| investment environment have been a huge driving | | | | foreigners an extensive stage, and laws were |
| force to attract PE. | | | | encouraging PE to finance SMEs. These are the most |
| China is improving the investment environment | | | | important factors to attract huge PE investment on |
| gradually while spurring its economy to develop | | | | China enterprises. At present, China laws on operation |
| rapidly during the period of industrial transition. That is | | | | and exiting mechanism for PE are being perfected. |
| a favorable opportunity for PE. Nowadays, | | | | We believe that the economic and market |
| PEâs major business areas in China include: to | | | | environments will continuously get improved. PE shall |
| provide financial support for the merging and | | | | have a brilliant prospect in China. |