Venture Capital in China: A Culture Shock for Western Investors
Management Decision, Vol. 45, pp. 708-731, 2007
Posted: 16 Jan 2009
Date Written: January 13, 2009
Getting an early foot in the door of a young start-up firm through venture capital investments has on average been a risky, but a highly profitable investment strategy. The possibility to reap similarly large profits in a country that leads the world in new business establishments, whose people are driven by a highly entrepreneurial spirit, and whose government continues to open its markets, makes China particularly interesting for venture capital investors. Our study examines peculiarities of the venture capital market in China and compares it to Western markets. We argue that different cultural norms, corporate governance structures, a lack of appropriate exit strategies, and governmental intervention are important factors that set the markets apart and should be taken into consideration when making venture capital investments in China.
Keywords: Venture capital, Economic policy, Entrepreneurialism, China
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