The Challenge

• China’s extraordinary growth--averaging more than 9 percent annually for the past 25 years--has occurred despite major gaps in the country’s capital markets
• Government policies have funneled the vast majority of domestic capital to large state-owned enterprises, leaving small and mid-sized private enterprises perpetually starved for growth financing
• Private companies account for nearly 60% of China’s GDP, but receive only 27% of business loans (Far Eastern Economic Review, May 2006)

“China's private companies have been systematically discriminated against by the capital market and the legal system. The state-owned banking system is notorious for molly-coddling the inefficient and debt-laden state-owned enterprises, while shying away from the vibrant private sector.”

-- Asia Times

• Despite large foreign capital inflows in recent years, many prosperous private companies fall below foreign investors’ radar, either too small or too financially unsophisticated to attract foreign investment