Developing the venture capital business problem analysis

[Abstract] high-tech industry Development is a national long-term the most important source of competitive advantage, but also to measure an important indicator of national economic strength. Compared with developed countries, China's economic strength and technological strength is still relatively backward, but also need to risk investing in an intermediary in order to promote economic Development of scientific knowledge, quick catch up with developed countries. venture capital in the market economy to support scientific and technological achievements into an important tool. in the market economy and society, in the high-tech transformation process to the actual productivity , venture capital is an essential component of understanding the basic theory of venture capital and international experience in promoting the Development of venture capital and enhance its economic strength, of great significance.

[Keywords:] risk of developing high-tech venture capital

First, the venture Investment in China's Development momentum
1. A high-risk high-return Investment
In general, the venture capital industry focus on high-tech industries with good growth in these industries due to market conditions, technology and other factors influenced the level of Development, with great uncertainty of the future, so their overall Investment risk Investment compared to other much larger. In addition, the volatility of Investment returns can not be ignored is a big factor. venture capital will be high-yield, high risk Investment is a combination of risk and high yield.

2. Current urgency of developing the venture capital
Development of the world has entered the era of knowledge economy, knowledge-intensive industries have become the core of all industries, in deciding a country's economy competitive in the international market, the size of the fundamental factors. For the first time since the industrial revolution 100 years of history shows that only technical progress and sustainable economic development is the fundamental driving force; only rapid technological progress, is the fundamental guarantee of economic security. reform and opening up, China's rapid progress in science and technology, effectively promoted the rapid development of national economy sectors, technological progress to economic growth has improved significantly. but also should clearly see that this period of technological progress mainly depends on "introduction." In an increasingly competitive international market conditions, relying on the introduction of advanced technology, extremely difficult to maintain a competitive advantage; on a large developing country such as ours, the lack of adequate and innovative technology, to ensure sustainable economic development and economic security, extremely difficult.

Second, the development of venture Investment in China has the advantage of business
Risk Investment in China is already have some of the conditions and advantages for the development of China's venture capital industry has played a significant role in promoting.

1. Reform and opening up provide a macroeconomic environment
Since the reform and opening up, China's gross domestic product (GDP) maintained an average annual growth rate of about 10%, much higher than 3% of world economic growth over the same period the level of .2000, China's GDP reached 8.9404 trillion yuan. As the national economy growth, China's access to only maintain a continuous growth in trade, import and export trade in 1998 worth 324.05 billion U.S. dollars, 43.57 billion U.S. dollars surplus in 1999, $ 360,630,000,000 total import and export trade, trade surplus of 29.23 billion U.S. dollars, become the world's 10th largest trading nation .2000 import and export volume reached 474.3 billion U.S. dollars, an increase of 31.5%, 24.1 billion surplus.

2. High-tech products to provide the material basis for broad prospects
In recent years, as China's high-tech industry development, high performance of domestic goods, imports have been gradually replaced gradually occupied the leading position in the Chinese market. From the Chinese high-tech supply side, according to the National Bureau of Statistics, 2000 National organizations of the 280 key technical Innovation projects and 1,329 key pilot production of new products; completed 101 major technical equipment development and evaluation. the year a total of major scientific and technological achievements provincial level or above 30,260; granted 105,344 patents , 5.2% more than last year. technology market more active, a total of 265,000 signed technology contracts, technology contracts turnover of 63 billion yuan, an increase of 20%. This proves that the Research results available in China is very rich, the development of venture Investment in China to provide a sufficient material basis.

3. Accession to the WTO opportunities
China's accession to WTO, a large number of joint venture management company will appear, a large number of foreign funds through the formation of joint ventures into China venture capital market, which will promote the great cause of China's venture capital development. First of all, foreign Investment risk of large-scale intervention investment performance of venture capital companies will be gradually improved, high-return characteristics will be gradually reflected the effect of increased investment risk, investment risk reduction, which will promote a lot of private capital into the venture capital market, China's venture capital industry will be unprecedented development; Secondly, the risk of investment projects and a good source of rich commercial potential of our country's hot spots for foreign venture capital, high-tech market liberalization, foreign capital will enter the venture capital market in China provides a wealth of project resources;

Links to Research Papers Download http://www.hi138.com three main problems and countermeasures
1. Problems
Venture of the human environment is not ideal, Researchers over-reliance on the state, lack of self-Innovation spirit; in the scientific Research system, the over-reliance on academic authority, is not conducive to the formation of social Innovation system; by the traditional culture of long-term thinking, "Contentment", "content with", "good deed goes unpunished", "Like mother, like daughter" and so deeply rooted ethical and moral concepts, the development of venture capital is very bad; lack of venture capital the failure of the social security system, once the investment fails, you may perdition; venture capital funding sources narrow channels, small-scale venture capital firm, a small number of funds is weak, reach industrial scale, making it difficult to play in the high-tech industries leading role; and venture capital regulations and policies to match is not perfect, China's legal system lags far behind the development of China's venture capital practice, so far, no published <"Risk Investment Fund Law">, the establishment of venture capital, fund-raising and other aspects of the operation and there is no clear Law to guide the activities of venture capital alone a <"State High-tech Industrial Development" Draft>, while <"Investment Fund Law >>,<< Venture Law"> has been included in the national legislation program, but it still takes time introduced, and although other Laws have been introduced, but focused on venture capital is not strong, many provisions do not meet the objective requirements of the development of venture capital, including "<Law>>, <<Partnership Enterprise Law >>,<< Tax Act "> the relevant provisions restricting the development of venture capital companies.

2. Countermeasures and suggestions
Create a favorable external environment for the development of venture capital to create the development of venture capital to adapt to social environment, and vigorously promote the role of venture capital, encourage Innovation, failure to provide protection for the risk investment mechanism; involved in venture capital fund formation, venture capital to expand the scale of Government participation in venture capital fund formation, venture capital town in order to effectively expand the scale. venture capital in addition to government support, should actively involve civil capital, the ability to raise the community's individuals and businesses of idle funds, to attract institutional investors, funds, such as securities companies, insurance companies, banks and trust and investment companies, pension funds and the appropriate opening, such as social pensions, health insurance, unemployment insurance and housing fund. to provide financial support, the Government should actively create conditions to gradually increase the risk of investment subsidies to capital investment, through the provision of credit guarantees to transfer part of the credit risk for banks to ease the current lack of venture financing. the rule of law, management, and as soon as possible to create a favorable investment environment, the Government should formulate preferential policies to encourage venture capital industry, and recommends changes as soon as possible and improve relevant laws and regulations, as soon as possible to modify <<Law>> Intellectual Property Rights relating to the terms and price of the contents of the relevant property transfer; as soon as possible to develop <"Risk Investment Management Ordinance>>, norms venture capital firms, to operate according to the law; improve the accounting and auditing systems, and effectively protect the legitimate rights and interests of private investors, reducing environmental risks, the risk of legal protection for investors in the firm.


References:
[1] Cheng. The operation of the China Venture Capital Practice and Innovation [M]. Beijing: Democracy and Construction Press, 2004.256.

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