Two documents have been submitted for approval: Regulations for the Development of Software and IC Industries and Certain Policies to Further Encourage the Development of Software and IC Industries. The policies contain clearly established sections regarding investment and fund raising. A venture capital investment fund will be set up and support from policy banks will be intensified; listing for fund raising purposes will have priority; issuing of enterprise bonds will be supported; and management of foreign exchange utilization will be optimized.

Energy industry still hot

Following the successful listing of Wuxi's Suntech on the New York Stock Exchange (NYSE) and Zhejiang's ReneSola on the AIM board (growth enterprise board) of the London Stock Exchange, two more Chinese solar energy enterprises held their IPOs on two stock exchanges in the United States in late 2006. Changzhou's Trina Solar Ltd. landed on the NYSE, raising $98 million; and Linyang Solarfun, raising more than $150 million, was listed on the NASDAQ.

The success of solar energy enterprises has lured more capital investors to the industry. According to USA Today, U.S. venture capital will continue to enlarge its investment in the energy sector in 2007. Experts have estimated that there is still room for energy investment, despite large increases in 2006.

John Denniston, partner of KPCB, a renowned venture capital company with more than $200 million invested in environment friendly enterprises, endorses the green industry "wholeheartedly."

"Many venture capitalists have switched to energy investment, particularly replacement energies that substitute the traditional ones," Denniston said. "Recently, KPCB also invested in Miasole, a developer of low-cost solar cells.

"Regardless of the industry, investment funds only focus on one or two market frontrunners," said Chen Hong, Managing Director and CEO of Hina Group. In addition, he did not feel good about the prospects of large amounts of capital flowing into one industry.

VC loves social networking

According to the 2003-2006 Venture Capital Investment Report on the Internet Social Networking Industry in China, recently published by ChinaVenture.com, 16 online social networking enterprises in China were known to have obtained venture capital. And six of these enterprises received two rounds of investment. For the 16 enterprises, the total amount almost reached $100 million.

It is worth noting that no domestic social networking websites are currently listed. And, in comparison, the scale and intensity of fund raising and mergers of social networking websites in other countries are way ahead of China. In September 2006, the Japanese leisure and social networking website "mixi" was listed, raising $93 million. In December 2006, the German business social networking website "XING" was listed in Frankfurt, Germany, successfully raising 100 million euros (approximately $130 million). Recently, Yahoo proposed to purchase Facebook, the highly successful campus social networking website founded by Harvard student Mark Zuckerberg in 2004, for $1.6 billion. Some insiders believe, despite a possible declining trend, investments targeting social networking websites will continue to grow.

The successful listings of overseas enterprises provide examples of business models and capital operations for Chinese enterprises. After years of development, the strong momentum in the domestic marriage and romance social networking market has rationalized and matured. Investment institutions look forward to getting more returns on their investments through the listings and mergers of social networking websites. Therefore, it is highly possible that some large foreign enterprises may enter the Chinese market in the form of direct mergers, acquisitions or capital injections.