Source: China Daily

12-07-2008 18:24

When Robert Theleen set up his China-focused private equity fund in 1982, the American venture capitalist was faced with a dilemma: there were few Chinese entrepreneurs with whom to make a deal on the mainland.

Robin Li (fourth from left), CEO of Baidu.com Inc, rings the NASDAQ closing bell on August 5, 2005 at NASDAQ's Market Site in New York  City. [China Daily]

The reason was simple: a planned economy simply needed no entrepreneurs. And following Deng Xiaoping's move to reform the economy in 1978, the first group of private businesses were still struggling to accumulate their first fortunes.

Theleen's ChinaVest, the first foreign venture capital fund focused on the mainland, had to cast its sights on entrepreneurs from Hong Kong and Taiwan instead. And as there were basically no hi-tech industries on the mainland at the time, ChinaVest could only put its bets on the export-oriented manufacturers, thanks to the nation's enormous pool of low-cost labor.

Twenty years later, Theleen's dilemma was gone. Venture capitalists, from abroad and home, are flying into the nation to bargain with picky entrepreneurs for deals that could make them millions of dollars. The nation, still labeled a manufacturing powerhouse, is showing the potential to fashion itself into an innovation hotbed, as investors spend heavily in a bid to cultivate the next Baidu, Sohu.com and SunTech.

"I am excited about the entrepreneurship and the potential for innovation we are seeing here," Timothy Draper, a veteran Silicon Valley venture capitalist, said in an interview with China Business Weekly last year. "We may see some world-class (businesses) coming from this nation in a few years."