Economic Analysis Of The Venture Capital Characteristics In China

After more than twenty years development and influenced by China's unique situation, venture capital in China forms its own characteristics as exemplified by "controlled by overseas VCs", "invested mainly in expanding enterprises" and "investment targets lack of independent intellectual property rights". Then the following results stand to reason. On the one hand, a lot of local enterprises engaging in new industries and with great development potentials are controlled by overseas venture capitals and the profits gained therein are also carved up by them; On the other hand, venture capitals are mainly injected into expanding enterprises and traditional industries in contrast to the much less support and cultivation given to the independent technologies and new enterprises, thus unable to play its main role as the catalyst for innovation promotion and technology commercialization. Therefore, it has become a key topic of urgency and practical significance how to change the characteristics of China's venture capitals by policy implementation, catalyze local venture capitals, enhance independent innovation and protect independent intellectual property rights and realize the beneficial spiral between commutative enhancement of venture capital industry and independent innovation.On the basis of a large amount of data and case studies and using the information economics theory to analyze and induce the reasons for how the characteristics are formed, suggestions for policy making are put forward in order to provide references to how to refine the venture capital theoretical system catering to China's situation. The paper is composed of six chapters.Chapter One states the research background and significance of the paper and gives a theoretical summary of venture capital research.Chapter Two briefly reviews the history of venture capital development in the U.S. and analyzes the status quo and characteristics of venture capital in the U.S.Chapter Three gives an in-depth analysis on the status quo of venture capitals in China on the base of reviewing the history of venture capital development in China and a large amount of authoritative data from 2002 through 2005.Chapter Four concludes with the three characteristics of venture capital in China,namely "controlled by overseas VCs", "invested mainly in expanding enterprises"and "investment targets lack of independent intellectual property rights", based upon alarge amount of data and case studies.Chapter Five analyzes the underlying reasons for how the three characteristics areformed by applying the theory of information economics.Chapter Six thoroughly analyze the potential influence those characteristics wouldhave on the future development of China's economy. And therefore customizedpolicy making suggestions are put forward from the viewpoints of reducingtransaction costs, eliminating information asymmetry and application of CoaseTheorem.