Focus Makes Time-Honored

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Focus Makes Time-Honored

China Venture Capital and Private Equity Association 10th Anniversary

China Venture Capital and Private Equity Association (CVCA) celebrated its 10th Anniversary in Beijing on June 18, 2012 . Around 300 industry players attended the event.

Xianglong Dai, Chairman of National Council for Social Security Fund, Chuanzhi Liu, Chairman of Legend Holdings,Yichen Zhang, CEO of CITIC Capital Holdings Limited, John Zhao, Founder and CEO of Hony Capital, Hugo Shong, Founding Partner of IDG Capital Partners, Andrew Y. Yan, Managing Partner of SAIF Partners, and Shangzhi Wu, Managing Partner of CDH China Management Company Limited, along with many other PE/VC forerunners walked the golden carpet symbolizing the glory days of CVCA and China PE/VC industry.

Chang Sun, Managing Director of Warburg Pincus, Co-Founder of CVCA, expressed regrets over being unable to attend the celebration in person via an oversea phone call. Chang recalled the founding of CVCA and blessed CVCA a good future.

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CVCA 10th Anniversary Celebration

Xianglong Dai delivered a congratulatory speech to CVCA. In the speech, he underscored the increasing importance of PE/VC industry for China's social and economic development. "The PE/VC industry is facing new development opportunities with government policy support." Xianglong Dai said, "The development should be given more attention, promotion, support, and protection." He appreciated the efforts CVCA has made in the past ten years to promote the progress and the development of PE/VC in China market as the first non-profit independently run association of the industry in China, and hoped to collaborate more closely with CVCA and its members in the future.

On behalf of the CVCA board of governors, Yichen Zhang, Chairman of CVCA, appreciated all the support from friends in the past decade. He announced that John Zhao has been elected as the next Chairman of CVCA board of governors. "It is a great honor for me and Hony Capital, and I thank the board of governors for the responsibilities they have entrusted in me." John said. "We will continue our efforts to make CVCA more professional and efficient by providing state-of-the-art services on the basis of the past high standard and level.” John Zhao will be inaugurated on Jan.1, 2013.

The first-ever CVCA Awards were presented at the celebration. Xianglong Dai and Chuanzhi Liu were honored Man of China PE/VC individually given their impact and contribution to the industry. "With substantial experience in running home-grown companies from scratch, we have the ability to select the most competent fund managers in sectors/industries we understand." Chuanzhi Liu said in an impromptu interview when receiving the award. Pioneer PE/VC Awards were also announced and handed out to 11 institutions including CDH Investments, DT Capital, Fortune Capital, GGV Capital, IDG Capital, iDTechVentures, Legend Capital, SAIF Asia Investment Fund, Shenzhen Capital Group, TPG, and. Warburg Pincus. The selection criteria for the awards are:

Must be established no later than 2002;

Have been focused on China's market; or have a clear strategic positioning in China's market;

Active in the industry with a leading presence, reputation and impact.

Jing Huang, Partner of TPG Growth and RMB Funds, hosted the PE/VC Stories session featuring Andrew Y. Yan, Managing Partner of SAIF Partners, Hugo Shong, Founding Partner of IDG Capital Partners, and Jun Lei, Chairman of Kingsoft. They summarized China's PE/VC practice in the past decade with the key words Lonely, Golden, and Courage, which aroused the audience's sympathies.

During the Guess and Win My Lunch session, four YVCC members won the opportunities of having lunch with Hugo Shong, Yichen Zhang and John Zhao.

The 10th Anniversary marks a milestone for CVCA. The association is embracing its new decade with constant mission and renewed vigor. 

Xianglong Dai (Edited according to tape record)

Thank you very much for the invitation from CVCA chairman. On behalf of the National Council for Social Security Fund, I would like to express our warm congratulations to CVCA for its tenth anniversary!

I'd like to take this opportunity to share four aspects:

First, China's private equity funds will have a rapid development. I, myself, have been connected with PE for 16 years! Developing equity investment funds can help support enterprises, especially the growing enterprises, and is good for investors to build up wealth. For today, it is also helpful for the transformation and upgrading of the economy. Private equity investment is a promising service. PE/VC managers are capital engineers. We will make our efforts to support them.

Second, the quality of the equity investment depends on the core team. I have stayed in touch with CVCA for more than three years and I attended the annual general meeting of CVCA once in Shanghai. In the process that I contacted with CVCA members, I deeply feel that CVCA members are a number of excellent managers. Not only do they attach great importance to credibility of corporate governance, but are also loyal to LP's mandate and dedicated to the fund value appreciation for LPs. I think, selecting good manager means to choose a good team. The reason why CVCA is so successful is that it has attracted China's most outstanding managers and pioneers.

Third, the management of equity funds needs autonomy. Equity fund managing is a special business. Fund owners choose managers they trust and gain returns through value-added services the managers provide. So, the key are two parties, investors and managers. I think the most important thing is that the government should not intervene. The ten-year development makes CVCA a success. The key reason is it is an organization founded by, managed by and providing services for members. In my knowledge, CVCA is a role model for China's PE/VC associations with its longest history, roles fulfilled, and disciplined philosophy.

Fourth, the National Council for Social Security Fund will fully support CVCA and other investment fund associations and managers. Up till now, we have chosen ten managers, 13 funds. Half of the managers are CVCA members. We promised to invest RMB 20 billion this year and it may reach RMB 30 billion in the end. Next year, the investment pace may speed up. So in the future, National Council for Social Security Fund would like to keep closer contact with CVCA and its members. Let's work together to create a super return, to promote CVCA, China PE/VC industry a healthier, quicker, and better development. Thank you!

Chang SUN (Edited according to tape record)

In 2002, there were just a few people engaged in VC/PE. Today, the growth and popularity of VC/PE in China are beyond all expectations, even to the point of "national PE".

Ten years ago, I once complained about the five setbacks doing PE investment in China: financing, deal sourcing, valuating, managing, and exit. Nowadays, the difficulty of financing and exit has been greatly lifted. We have seen the availability of foreign currency and RMB fund, and support from new emerging domestic LP institutions. The domestic private equity investment industry has reached its golden age.

However, this is an era of the good and the evil co-existing. Our industry practitioners should keep a clear mind, insist on doing business legitimately, adhere to strict and prudential investment approval and responsible due diligence practice, to let our LP satisfied. CVCA must urge members to do well in internal management and self-discipline, provide training and communication platform for members, in the meantime, try to improve regulatory and policy for the industry.

As a nonprofit membership organization, CVCA has developed for ten years, attracting so many industry elites to our board of governors. Time proved its value for private equity industry.

I hope, CVCA's members, new friends, we all regard CVCA as our own organization, and take good care of it, support it, take an active part in its activities and help it grow with the industry together.

I wish CVCA 10th anniversary celebration a wonderful success!

Yichen ZHANG (Edited according to tape record)

Today is a big day, not only for CVCA, but also for our whole industry. For CVCA, this may have been the first time that almost all the 20 governors gather together. I also see lots of acquaintances in the room. Please allow me, on behalf of CVCA board of governors, to extend a warm welcome to all the guests. CVCA's growth owes your support. Thank you so much!

It is in 2008, when I was the chairman of the council, that the National Council for Social Security Fund got the approval of the state council to invest in PE/VC industry and chairman Dai soon took the office. In fact, this was a landmark for our industry development and for the growth of RMB fund.

. In the past ten years, our effort to promote the industry includes issue of code of conduct and guidelines, reports, providing training programs and seminars to our members to give young people chances to communicate with each other and learn experience from the predecessors. We also actively communicate with relevant government administrations, especially policy makers in the hope to promote a sound environment for the industry.

I have served as the chairman of CVCA for four years. One of my main taskes is to recommend a successor that I think the most appropriate to the board. Taking this opportunity, I'm pleased to announce that, during the just convened board meeting, John ZHAO has been elected unanimously as the next chairman. Here I would like to express my warm congratulations to John. Although he has a lot of social positions, looking at the big picture of industry development, he has accepted our election, and we are very happy. I believe that John will lead the association to a higher level. Let's welcome John to give us an address, welcome!

John ZHAO (Edited according to tape record)

Thank you, Yichen. It's a great honor. CVCA is a disciplined association initiated and founded by members, and run by members on a voluntary basis. It is poised to provide professional and high quality services to boost the PE/VC industry in the Greater China region. Bearing the mission in mind, I feel to serve as the Chairman of CVCA means a big responsibility as well as a great trust from the members. I also think the trust in me is a recognition to Legend Holdings and Hony Capital where I work. Really appreciate that. Thank you!

In the past decade, the three Chairmen, Chang SUN, Hugo, Yichen, have led the trade association from birth to witness and participate in the fast growth of VC/PE industry in China along with China's economic growth. Many examples show how VC/PE has been an engine to China's economic development beyond money making, for instance through supporting innovation, structural adjustment, going global and improving corporate governance and management.

As CEOs, our first priority is to run our companies well. However, in order to run our own enterprise well, we need to run our industry well. For the time being, PE/VC to China and Chinese society is still an exotic business. It's worth our efforts to make it localized and become a part of China's economy. That is a task that any individuals, institutions or conferences alone cannot accomplish. It needs all of us, the industry players, practitioners, to work together. Please accept my humble request on your support to CVCA. I hope CVCA will be home to more and more PE/VC players in China who will enjoy satisfactory and professional services here. Thank you!

Chuan-zhi LIU (In a live interview after accepting the Man of PE/VC award. Edited according to tape record):

MC: Mr. Liu, you entered into PE/VC in your sixties, I was wondering what your consideration is at that time and what choices you made?

Liu: The first is to keep enterprise safe. From a shareholder's point of view, doing only high-tech business is risky. We hope to have a more balanced business structure. In addition, we have such ability to do VC/PE indeed. As we started from scratch running a small IT company into a big one, we know how to choose management and companies. Both Hony Capital and Legend Capital have experienced their own learning curves – they keep reviewing the past while taking up new tasks. Nowadays both firms start to gain decent returns and we are ready to take this money into new areas.

MC: Thank you. Would you like to share your expectations to China's economic development and future PE environment?

Liu: Chinese economy is faced with a lot of uncertainties. In the coming decade, the change of the world economy is also hard to predicted. The world economy will influence Chinese economy, but I think that Chinese economy will add more effects on world economy. I hope China's economic policies can be further reformed and opening up. Meanwhile, China's political restructuring should also continue along with China's economic restructuring,.

PE/VC Stories (Edited according to tape record)

Hugo SHONG: I might be among the earliest who engaged in PE/VC in China, almost 20 years. In those early days, we were regarded as fools. Few understood what we did. I felt lonely.

Andrew Y. YAN: It was in 1994 that I joined the AIG Asia infrastructure investment fund in Washington. The past 10 years I call it the Golden 10 years, but now I have a concern that it is not probably for us to have another decade like the past one.

Jun LEI: I started to run my own business in 1989,,more than 20 years.To start a business is a very tough job, full of frustrations, and the yield ratio is pretty low.

Jing HUANG: So, that means your keyword is courage?

Jun LEI: Yes. Because having done some investments for a few years, I saw too many failures. Then I thought if I badly failed as I want to create another enterprise, will it be a shame? Indeed, I spent half a year to overcome the psychological barriers.

Jing HUANG: Andrew, What kind of entrepreneurs can make you feel very cool? What kind of entrepreneurs, you think are difficult to work with?

Andrew Y. YAN: Respect for entrepreneurship. This is an essential quality for the entrepreneurs. However, unfortunately in China, the majority show little respect to entrepreneurship.

Jing HUANG: Hugo, as a predecessor, do you have any advice for people just entering this industry?

Hugo SHONG: I believe that in the investment, the most valuable thing is to learn lessons. Young investors, you should not be anxious. The more you want to lead, the easier it is to go wrong. Just be long-term. At the same time, investments always rely on three judgments, namely, market, industry, and team; then comes luck; time length is also pretty important. In China, generally, 10-year+ funds are basically very good, as long as they keep going. That means China has still given us a very good opportunity.

Jing HUANG: You are all successful and wealthy, why you are still actively working so hard?

Andrew Y. YAN: For me, it is quite simple, because I love this job. It is a very special job. Every day is a new day. But it is very hard. If you can't enjoy it, it is a process of shortening one's life. This industry has its criteria. There are some invest teams in China taking guerrilla approach, however, I don't think they will harvest. This is an elite industry. One need many years to accumulate experience and learn from lots of trial and error. I'd like to share some statistics based on the US PE/VC industry. It will generally take 13.5 years for one to become a mature investor in the U.S., who is able to lead a team to do investment independently. Maybe in China it will be shorter, but at least ten years is a must. Furthermore, one has to be passionate, self-disciplined.

Duane KUANG on YVCC (Edited according to tape record)

I found the winners in Guess and Win My Lunch section are from YVCC. YVCC is a club for young investors, an affiliate organization of CVCA. The young venture capitalist club is a platform for the young generation in VC/PE industry to make friends and share knowhow. Now YVCC has more than five hundred members. I want to take this opportunity to call on our CVCA members and all the guests here to encourage young people in your companies to take part in YVCC activities. We have both learning seminars and entertainment activities. YVCC is open to you, young venture capitalists. Thank you!

@汪潮涌 (Chaoyong Wang): CVCA 10th Anniversary Celebration.NSSF Chairman Xianglong Dai is delivering an address now. 10 years ago CVCA was established in Beijing, the temporary office was set up in ChinaEquity's Beijing office. I was honored to be a co-founding director together with Chang Sun, Andy Yan, Hugo Shong, Wencui Zu, Wanshou Li, and Cathy Xu. Over a short span of ten years, VC industry has greatly developed in China, while CVCA has become one of the most influential self-regulatory organizations in the industry.

@投资老兵卓福民 (Fumin Zhuo): NSSF Chairman Xianglong Dai is delivering an address at CVCA 10th Anniversary Celebration. The National Social Security Fund has so far invested up to RMB20 billion in VC/PE firms across 10 funds. As China's largest and most professional FOF, NSSF made undeniable contribution to the healthy development of China's PE industry.

@投资老兵卓福民(FuminZhuo): It's the first-ever CVCA Awards in ten years. Xianglong Dai and Chuanzhi Liu were honored with Man of China PE/VC Awards individually given their outstanding contribution to the industry. Pioneer PE/VC Awards were handed out to 11 institutions. All of them were established no later than 2002 and still active in the industry with a leading position and impact. GGV is proud to be one of them. We appreciate the trust LP have placed in GGV, the efforts of investee companies, and the hard work of the team! Thank you, CVCA!

@GGV纪源资本 (GGV Capital): Congratulations on GGV's Pioneer PE/VC Award! Thank Zhuo Zong for bringing the good news!

@月亮在狮子上 (Lion on the moon): "You need 13.5 years' experience with trials and errors to become a mature investor." Andy Yan said at the CVCA 10th Anniversary Celebration. It's a long way to go, guys!

@cooper_fan: It was a lucky break! I won two prizes at the CVCA 10th Anniversary – 1. The opportunity to have lunch with Hugo Shong, Founding Partner of IDG Capital Partners; 2.A new Ipad sponsored by Minsheng Bank!

@范兆骥(Zhaoyi Fan): Roman Shaw acted professional as a host at the CVCA 10th Anniversary Celebration.

@郭卫锋-投资基金律师(WeifengGuo– Investment Fund Lawyer): The CVCA 10th Anniversary Celebration is a very creative event. I'm surrounded by friends with sunny smiles.

@韩大为_David (David Han)：Andy Yan, Hugo Shong, and Jun Lei are talking about the PE/VC stories in the old days at CVCA 10th Anniversary Celebration.

@范兆骥(Zhaoyi Fan)：John Zhao, Chairman-Elect of CVCA, will continue to make CVCA more professional and efficient by providing state-of-the-art services.

@张阳_Karen (Karen Zhang): CVCA has supported the healthy development of PE/VC industry over the past 10 years.