PE helping to drive innovation

By Tian Bing in Tianjin (China Daily)
Updated: 2012-06-13

Few Chinese people had even heard of the term private equity in 2007 when the first China International Private Equity Forum was held in the Tianjin Binhai New Area.

The forum has since played a significant role in alleviating the financing woes of small and mid-sized companies. As it celebrated its sixth birthday yesterday, government officials and corporate leaders lauded the success, yet noted the hurdles ahead with openness and candor.

Banking veteran Dai Xianglong, a former mayor of the host city, said Tianjin has been the most important player in the nation's private equity sector.

"If Tianjin succeeds, let it be the leader. If it fails, China will pay the price," Dai said.

Deputy Mayor Cui Jindu noted that six parties - investors, management, agencies, registration authorities, trustees and regulators - need to work together to achieve their economic goals.

Liu Yongyuan, chairman of Deshengli Private Equity Fund Management, represented fund companies at the forum, noting that in the past it was difficult for small businesses even to find funding channels due to a lack of clear regulations.

After new regulations took effect, small firms faced a new problem. "Now, pricing is what vexes borrowers," Liu said.

The shift in the private equity sector from lack of funds to "unfair pricing" took only a half dozen years, a measure of China's economic growth, he said.

Beginning in 2007, private equity became a more important financing component for underserved companies and helped drive the market economy following reform and opening-up policies that were first advocated in 1978.

Tianjin now has nearly 2,500 private equity companies serving various industries.

(China Daily 06/11/2012 page24)