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Returnees are 'seed capital' for startups

Updated: 2013-10-25 00:16
By XIE YU in Suzhou, Jiangsu ( China Daily)

Government funds earmarked for universities and research-and-development centers were used over the past couple of decades to cultivate the first wave of entrepreneurs in China.

Banks, local governments with technology zones and industrial parks later became technology investors.

Today, the rise of China's venture capital sector is supporting the entrepreneurial environment.

Media reports have said that VC investment in China peaked at $6.3 billion with 362 deals in 2011.

VCs are still keen on the Chinese market, although they've become more cautious because of a freeze on initial public offerings since late 2012, which blocked a common exit mechanism.

"You've got to go to the early stage to find good opportunities,"said Deng Feng, founder and managing director of Northern Light.

"In recent years, venture capitalists were like hunter-gatherers picking the low-hanging fruit.

"Now, we have to become peasants who labor together with the enterprises that we've invested in, to make a profit,"he said.

But that also means more opportunities for people with "hard"technology such as Wen and Poon to attract capital for their innovations.

"China has a solid base in its manufacturing industry. It's very easy to combine the hard technology and undertake mass production here,"Deng said.

Deng himself is a "returnee executive”, who was born and grew up in China. He studied and worked in the US before returning to China and setting up his VC firm in 2005. Northern Light focuses on early-stage, technology-enabled business opportunities.

"Talented returnees are displaying explosive creativity and energy in China, and becoming fresh troops in leading China's strategic emerging industries,"a central government said.

The report said that revenue generated by enterprises under the One Thousand Talent Plan has reached 63.2 billion yuan, generating profits and tax revenues of 3.5 billion yuan.

Even beyond this program, more young Chinese are returning home to find economic oppotunities.

"It is easier to achieve fast growth for companies in China due to the thriving economy. I plan to go back and start up my own business, although I am reluctant to leave the great technology atmosphere in the US,"said Wang Pu, 32, who works as an engineer for Google Inc in the US.

The Ministry of Human Resources and Social Security said 272,900 overseas students came back to China in 2012, up 46 percent from the previous year.

Although many returned students complain that it's hard for them to find jobs, high-end talent is in great demand everywhere in China. Besides the One Thousand Talent Plan, local governments at all levels are wooing well-educated specialists.

For example, Pudong New Area in Shanghai released a five-year plan late last year under which it earmarked 300 million yuan to attract world-class talent in finance, shipping and other strategic emerging industries.

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