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PRINT THIS PAGE Conducting successful transactions in China07/06/2006. Source: Ernst & Young. Gil Forer and Adj. Prof. Dr. Martin Haemmig
China's venture capital industry has experienced strong growth in recent years, both in the scale and breadth of activity. Existing foreign and local venture capitalists have stepped up the pace of investment in early-stage and private equity deals, while new entrant investors join the market as a China strategy becomes increasingly essential. Venture-backed M&A and IPOs meanwhile have provided profitable exits and created the success stories needed to fuel further investment. The business case for venture capital investment in China is clearly growing, driven by a virtuous cycle of investment and returns, corporate activity, and overall economic growth. At the same time, the increasing activity is pressing against regulatory and structural barriers, bringing the challenges faced by the venture capital industry in China into clearer focus.
What Investors Need to Know About the Differences Between China GAAP and US GAAP.
U.S. Venture Capital and Private Equity investors are increasingly looking to China for investment opportunities with a view to exiting those investments through an IPO on a U.S. exchange. One of the challenges of investing in China for U.S. investors is being able to understand and compare investment opportunities from a familiar frame of reference: US GAAP. Moreover, conducting an IPO on a U.S. exchange requires the conversion of a company’s financial statements from China GAAP to US GAAP. Knowing the likely impact of this conversion is therefore important in assessing both investment and exit opportunities.
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Authors: Gil Forer (Ernst &Young Venture Capital Advisory Group) and Adj. Prof. Dr. Martin Haemmig (CeTIM--Center for Technology & Innovation Management)
Ernst & Young, one of the world's leading professional services organisations, helps companies across the globe to identify and capitalise on business opportunities. For more information, please visit www.eyonline.com/growth
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