China State-Owned Bank to Fund High-Tech Startups

HONG KONG (03/03/2000) - China Construction Bank this week established a 500 million renminbi (US$60 million) fund for high-tech startups, taking one of the first forays into high-tech venture financing by a Chinese state-owned bank, according to a report in the official China Daily newspaper.

For the fund, the bank opened a special branch in a high-tech industrial park in the Shenzhen Special Economic Zone near Hong Kong, where foreign companies have recently invested in a flock of technology startups.

Shenzhen is rich in technical experts trained in China's universities, but capital is sorely needed for startups to carry out research and development and bring products to market, according to a China analyst at Sassoon Securities, in Hong Kong.

"Staying in the lab and doing research is insufficient," said Sassoon's Gary Liu. "You need people to market the product, and you need to do the marketing campaign. It's all about money."

Liu said a wide range of products, from software and chips to consumer electronics, might emerge from the area if developers are well funded.

Government statistics show 40 percent of Shenzhen's local industrial output comes from high-tech industries, according to the China Daily report.

The bank will finance projects through loans collateralized by local venture investment projects, according to the report. The branch has a team of approximately 30 experts to do investment consultancy and feasibility studies.

The move by CCB is more risky than is typical of state-owned banks, but is part of a trend backed strongly by the Beijing government, Liu pointed out.

"Top leaders in China have indicated in the past year or two that high-tech is the major element for the country to grow in the future," Liu said, including in the country's ninth five-year plan, designated for 1999 to 2004.

China Construction Bank, in Beijing, is online at http://www.ccb.com.cn.

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