Invest in resources to facilitate portfolio companies’ participation in China markets
Proactively encourage Chinese development units for portfolio companies
Establish presence through partnerships with major Chinese IT, communications firms
Invest selectively in top companies where we can add value
China Venture Capital Investments Increasing Strongly Source: Zero2ipo-China Venture Capital Annual Report 2004 $518 $1,269 $418 $992 (US$ Million) $402
So Why Are We Investing in China? China Rising… Billions (Except for Grads in Thousands) Telecom Exports Electronic Exports Computer Exports Engineering Graduates Germany $15.4 China $36.4 Rep. of Korea $15.8 United Kingdom $17.4 USA $21.6 Top 5 exporters of telecom Equipment (in billions), 2002 US 59,536 China 219,563 Russia* 82,409 Japan 104,478 European Union 179,929 Top 5 sources of engineering grads, 2001 US $2.5 China $8.8 Rep. of Korea $2.6 Germany $5.6 Italy $5.9 Top 5 exporters of electronics (in billions), 2002 Ireland $4.6 China $3.8 US $2.4 Mexico $2.4 Malaysia $2.7 Top 5 exporters of assembled computers (in billions), 2002 148,844 160,435 175,439 181,890 195,354 212,905 219,563 252,024 Sources: Wired Magazine; China Statistical Yearbook (1997, 1999, 2001, and 2003 editions); National Science Foundation; United Nations Statistics Division *Data from 1999. Note: China’s engineering numbers exclude Hong Kong graduates.
… And Will Likely Leapfrog U.S. and E.U. Focus Voice WAP SMS Conferencing Content Distribution Collaboration A/V Streaming MMS Mobile Banking Mobile Commerce Location Smart Applications Margin Communication Content Application Low Margin Medium Margin High Margin Source: IDC 2003.
9 of Top 25 Global Websites are Chinese Rank naver.com Myspace.com Google Japan Google UK N.Top Allyes.com AOL Anywhere BBC Online daum.net Tom.com CNN Taobac.com Site Name 14 15 16 17 18 19 20 21 22 23 24 25 Alexa – Global Web Site Traffic Rankings Korea USA Japan UK Korea China USA UK Korea China US China Country Rank Yahoo! MSN Google Yahoo!Japan Baidu.com Sina Passport.net eBay 163.com Sohu qq.com Amazon.com 3721 (Yahoo!) Site Name 1 2 3 4 5 6 7 8 9 10 11 12 13 USA USA USA Japan China China USA USA China China China USA China Country Source: www.alexa.com , 5/31/05. Note that Alexa’s traffic rankings are based on usage patterns of opt-in users of Alexa’s downloadable toolbar.
Zero2ipo-China’s Ranking of Top 10 Venture Capital Firms in 2004 Source: Zero2ipo-China Venture Capital Annual Report 2004
Capital Markets are Critical for China’s Future Success Countries with the most well-developed capital markets have outperformed those where banking-based systems dominate And a better return on the very large savings (as much as 40 per cent of gross domestic product) for households in China.
International Business Development Selected Examples
M&A and Follow-On Financings
Partnerships & Channel Distribution
Board Members & Management Team
Improving Conditions for New Companies Morgan Stanley Dean Witter & Co. 1980 – 2000 1995
Large home markets
Great technology companies
New ideas / new industries
Intellectual property rights
Effective patent laws
Low capital gains tax
Venture capital funding
M&A market for new technology companies
Easy access to big IPO market
Yes Yes Yes Coming No Yes Yes++ Coming Yes Yes Improving Improving Current Yes No Yes No No Yes Yes No No Starting No No USA PRC