Working Papers R & D CHINA’S VENTURE CAPITAL INDUSTRY: INSTITUTIONAL TRAJECTORIES AND SYSTEM STRUCTURE by S. WHITE* J. GAO** and W. ZHANG† 2002/122/ABA * Assistant Professor of Asian Business, INSEAD, Boulevard de Constance, 77305, Fontainebleau Cedex, France. ** School of Economics and Management, Tsinghua University, Beijing, China. † School of Economics and Management, Tsinghua University, Beijing, China. A working paper in the INSEAD Working Paper Series is intended as a means whereby a faculty researcher's thoughts and findings may be communicated to interested readers. The paper should be considered preliminary in nature and may require revision. Printed at INSEAD, Fontainebleau, France. Kindly do not reproduce or circulate without permission. China’s venture capital industry: Institutional trajectories and system structure Steven WHITE* INSEAD
[email protected] and Jian GAO and Wei ZHANG School of Economics and Management Tsinghua University Beijing
[email protected] [email protected] *corresponding author ABSTRACT The current structure of China’s venture capital industry is a recent phenomenon emerging from decades of government-led technology policy and a still-transitioning business system. This paper first traces the institutional and policy trajectories that have led to the current complex system in which technology-based new venture firms are being created and financed. It then compares the types of venture capital firms—government, corporate, university and foreign- backed—that have emerged in recent years as the primary agents financing new ventures in China. Case studies of venture capital firms and ventures that have been funded by them are used to identify general trends and important challenges to China’s current system for establishing and nurturing new technology-based firms.