Martin Li

    VENTURE capital can be an important driving force for the development of innovative small and medium enterprises (SMEs) in China, experts said yesterday at a forum on venture capital investment.

    Part of the ongoing 12th China Hi-Tech Fair, the forum was attended by venture capitalists, government officials and economics scholars.

    “There is insufficient capital investment in SMEs, which has dragged their development,” said Xiu Xiaoping, director of the high-tech industry center for the Ministry of Science and Technology.

    Xiu said the government should guide venture capital enterprises, which are seeing rapid and robust development in China, to invest in innovative SMEs with growth potential.

    The ministry has set up a guide fund to encourage venture capital enterprises to inject money into such enterprises.

    The fund has so far put 800 million yuan (US$120 million) into venture capital enterprises with investments in SMEs, Xiu said.

    On the other hand, SMEs should actively seek venture capital investments to boost their own development, said Jing Haitao, chairman of Shenzhen Venture Capital Association and Shenzhen Capital Group Co.

    “SMEs should not only depend on ‘self accumulation’ from profits to move ahead. They should also learn to make use of venture capital to achieve further development,” Jing said.

    There are more than 10 million SMEs in China, accounting for 99 percent of the country’s businesses, according to Jing.

    Jing added that, besides SMEs, start-ups and high-tech manufacturing enterprises could benefit from venture capital.

    Song Hai, vice governor of Guangdong province, said the provincial government would support enterprises in the province, especially those with venture capital investments, in listing on the growth enterprise market (GEM) board and SME board on the Shenzhen stock market.

    “The province will give preferential policies to facilitate the transformation and listing of enterprises, providing an excellent resource for venture capital enterprises,” Song said.

    A total of 137 enterprises had listed on the one-year-old GEM board by the end of October, according to the Shenzhen Venture Capital Association, which has 288 member enterprises.

    More than one-third of the listed enterprises on the GEM were funded by venture capital investments from Shenzhen, the forum was told.

    “Government should play a role as a guide rather than a dominator in the development of the venture capital industry,” said Chen Yingchun, vice mayor of Shenzhen.

    Chen said the city government would spare no effort in attracting more venture capital enterprises to Shenzhen.