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Business
Print Edition> Business
UPDATED: January 9, 2007 NO.2 JAN.11, 2007
The New Wave of China's Capital
Managing Director of New Access Capital Andrew Qian says, "Look to the three 'new' industries."
By JEREMY WANG
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Businesses will have different financial needs at different stages, and surely will also meet different financial problems. Capital aims for profit. With that said, how should domestic businesses answer the difficult questions posed to them by overseas investors? What aspects should private enterprises improve upon?

The majority of private enterprises need to first resolve their problems of horizon.

I participated in the second-phase financing of Focus Media. When people talk about Focus Media nowadays, they will always mention Jiang Nanchun. It's as if the two were a single entity. In fact, Jiang Nanchun currently owns only 20 percent of Focus Media. When we first began to take over the financing of Focus Media, he owned 70 percent, which at the time was valued at over $60 million. After a series of expansion projects, Focus Media is now worth more than $3.3 billion. From 70 percent to 20 percent, it would seem as if Jiang's shares decreased, but if you compared 70 percent of $60 million to 20 percent of $3.3 billion, the actual worth of his shares has risen more than 10 times. What is even more apparent is the increase in the strength of Focus Media itself. And while this example might seem very obvious now, there were many private enterprises that just could not see it. So like I said, they must first deal with their problems of horizon and open-mindedness. Only by resolving these issues can domestic private enterprises ultimately realize the possibility of real growth and development.

Even with an open mind, there must be appropriate packaging. Many Chinese misunderstand the idea of packaging. It does not mean to lie, to make something bad appear to be good. Professional packaging is supposed to clearly display the inherent advantages of the product while providing suggestions for dealing with any weaknesses or deficiencies.

Every company has its own competitiveness and, unfortunately, problems. But as long as one is clearly conscious of these problems and can offer straightforward solutions, there is no need to fear them. Even if you are clearly no match for your opponent, if you can utilize your strengths and avoid your weaknesses, and if you can fine-tune your stratagem with logic and rationality, then there is a real chance that you could come out the winner.

Also, experience speaks for itself when it comes to the business of financing, which sometimes may require the assistance of a professional financial consultant or a middleman agent.

Companies in new economic sectors also come across more problems during the course of financing than traditional companies. Can you offer these businesses some advice?

In comparison with traditional businesses, companies in the new economic sectors have their own characteristics. Currently, when overseas investors consider these types of businesses, they will mainly assess the company's orientation and the competency of its management team. If the company's core business is unclear or the outlook is bleak, the company will be considered to be a long shot. If doubt arises concerning the competency of the management team, then regardless of all else, the company will not receive the favor of venture capital or private equity firms.

So what business orientations are the most favored by financial institutions? Generally speaking, businesses that are competitive in the venture capital world are usually those that prove to be effectively innovative in one of the three "new" fields.

The first is "New Media," which mainly refers to digital media technology. Synacast-one of China's largest Internet media companies, for whom we drew in venture capital, is one such company. This type of company possesses a favorable market outlook.

The second is "New Energy." Due to the world's current main source of energy being mostly non-renewable fuels such as petroleum and coal, in a few decades, we will certainly be faced with the situation of an exhausted energy supply.

Therefore, it is vital for the entire world to find viable sources of alternative energy. For example, Suntech, mainly producing solar batteries, received the market's general approval after being listed in the United States in 2005.

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