Development Mechanism Of The Private Equity Market In China

There was no phrase like Private Equity Fund 20 years ago. But now the industry becomes a 700 billion US dollar capital pool. There are many reasons to explain why the private equity fund is so powerful in the Wall Street and business world. The followings are the most typical ones: the desire for higher investment returns, the tendency of globalization, the promotion effect of the private equity to the company and a country's economy, the demand of the some companies which are involved in the financial troubles want to sell the assets in the private equity market, and much lower financing cost because of the long term low interest rate and the huge number of cash the private equity fund holds, and all reasons like these. The development of the private equity investment is very fast in china, but for some certain reasons, it is in its early days of the development.The purpose of the paper is trying to give some advices to workout the mode of Chinese private equity market. There are a lot of obstacles, qualms and argument about the maturity of the market, the institutional mechanism and the developing mode in the early stage of Chinese private equity market. The research of the essay is principally about the problems that were focused on both by the theoretic researchers and decision-making people, such as the actuality and the direction of Chinese private equity market development. What's more, the writer also hopes to summarize the literatures of this field to do a favor to the upcoming researchers.The research of this article combines the experiences of developed countries and Chinese and constructs the developing mode of the Chinese private equity market. It also points out that the development of Chinese private equity market is kind of the strategic step to the construction of the multilayer of Chinese capital market system and the significant choice to develop the channels for the small and middle companies' financing which are involved in the financial troubles, In addition, it's very important for the state-owed companies to breakthrough the reform dilemma to be more internationalized and capitalized. The last, the development of Chinese private equity market is a two-win action for the Chinese financial system.The research of the article is divided into 5 parts. The first explains the background, the ongoing research, the purpose, the meaning, the methodology and systematic frame of the paper. The second part is a summary of the private equity market. The author defines the private equity market by differentiate venture capital and industrial investment. The writer also analyzes the birth, the development and system of the market. The third part of the paper is the international comparative analysis of the private equity market. The US, Euro, Israel and Asian market are compared to each other in perspective of the history and actuality. The forth part is mainly about the Chinese private equity market's circumstance and obstacle analysis which are in aspect of international environment, developing process, business cases and actualities of each part of the market system. The obstacle analysis is in the perspective of law and market drawbacks. The last part is about the Chinese private equity market's mode construction and path choice making. The author analyzes the way of inspection, risk management mechanism, market environment construction and the direction of the development, and the like.