Venture Capital in China Part 2
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