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Venture Capital in China Part 2

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Another area of concern is the lack of appropriate tax incentive policy crucial to encouraging new business investment. Most Chinese based VC type firms pay exorbitant tax rates which discourages their operation thereby limiting new business investment.             The China economy is structured differently in many ways and they currently do not have the equivalent of a US NASDAQ system. VC backed firms must meet strict requirements in order to function on the current local stock market. Further, there is no way for institutional investors to trade shares in the existing public markets in China .   A domestic exit option for venture-funded companies does not exist which poses a critically difficult challenge for investment vehicles.             On a less technical note there are cultural differences to be acknowledged as well as accepted norms that are established in western business transactions. It is has been reported that ethical failings or corruption occur in situations

Venture Capital in China Part I

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Venture Capital Potential in the Middle Kingdom While the economic possibilities and promises of China often seem limitless according to the media many serious Western investors also share this unbridled optimism. One area in particular, venture capital, has demonstrated a commitment to bringing the potential of China based investments to fruition. This attempt to tap the benefits of bridging the East and West via a digital silk road is more complex than is generally portrayed by the eager media. China still remains a unique and sometimes implacable culture that offers many obstacles to the over-eager Western investor seeking to extract her resources. To understand the reality of the situation an assessment of current VC trends along with the investment trends and opportunities in China must be performed. Then an understanding of the dynamics of foreign investment in China along with the issues of intellectual property must be gained. Finally, there is the exit strategy dilemma fro