"The development of VC will be a key propeller for SMEs and the national economy," Jing Shuping, chairman of the All-China Federation of Industry and Commerce said yesterday at the ongoing 2002 Asian Venture Forum (AVF)/China in Beijing.

The theme for the three-day forum is Forbidden No More: China's Private Sector Opens for Business.

Industry experts believe that VC will play an even greater role in boosting the country's privately-owned economy now that China has gained its membership into the World Trade Organization (WTO). More and more SMEs now turn to VC while facing fund difficulties.

A recent survey of the Ministry of Science and Technology indicated that till last year, there were 250 venture capital organizations in China, with total management funds reaching 40 billion yuan (US$4.8 billion).

It also showed that more than 1,500 SMEs have won support from 190 VC organizations with total investment aggregating more than 11 billion yuan (US$1.32 billion).

Contributions from privately-owned enterprises to the national gross domestic product (GDP) increased from 0.57 percent in 1989 to 20.46 percent last year, representing an annual growth of 2 percentage points.

By the end of last year, the number of privately owned enterprises reached 2.02 million with registered capital of 180 million yuan (US$21.7 million).

SMEs will have a better business environment when various restrictions are lifted.

"With its commitment to the WTO, SMEs will have an equal footing while conducting business," said Ernest Behrens, president and chief executive officer of Siemens China.

He said that WTO entry also paves the way for foreign SMEs to team up with Chinese SMEs to secure further growth in this tremendous Chinese market.

"A sound legal framework is the most needed element at the moment," Jing said, adding that the country could learn from foreign experience.

York Chen, managing director and partner of Acer Technology Ventures Asia Pacific (China/HK) said issues such as a lack of VC professionals and sufficient experience also needs to be tackled in the years to come.

(China Daily June 14, 2002)