Venture Capital Update: What Is Really Going On?

June 02, 2002 | BY

clpstaff &clp articles

Foreign-funded VC investments in China have failed to materialize and last autumn's national regulations are widely seen as inadequate. So what alternatives do investors have?

By Jonathan Ross, Charltons, Hong Kong

The MOFTEC Rules: Impractical and in Need of Revision

Since the Establishment of Foreign-funded Venture Investment Enterprises Tentative Provisions (hereafter the MOFTEC Rules1) became effective on September 1 2001, it has become common knowledge that the rules do not work. Though the MOFTEC Rules were designed to permit foreign funds to set up joint venture or wholly owned subsidiaries in China as vehicles for direct investments into Chinese portfolio companies, this has failed to happen due to limitations in the regulations themselves.

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