Despite current economic challenges and a rocky past year, venture capitalists and private equity investors remain cautiously optimistic about investment opportunities in Asia, especially those in China.

This was the message from the Venture Capital/Private Equity Partnership Conference held on September 16 under the banner, "Riding the Dragon." Organised by the Hong Kong Venture Capital Association, in association with the Chamber, Kevin Yip, executive director, GEMS, told the audience that on a micro basis, ever-changing regulations, a shortage of quality management and transparency issues mean there is no shortage of challenges.

Nonetheless, he pointed out that China's robust GDP growth, recent WTO entry and continuing flood of foreign-direct investment into the country are all creating a very favourable climate for investors to take advantage of.

"Deals continue to get done and money has been and will be made in China," he said. However, he stressed that the key to future success is to uphold an identical investment discipline in all countries or jurisdictions.

"We should not try to impose double standards as far as making investments in China is concerned. Issues prevailing in China are also common concerns in other markets, like Thailand, Taiwan, Korea and Japan; all require us to address these with due diligence."

Commenting on the role of venture capitalists and private equity investors in China's development, Mr Yip suggested that the time is ripe for investors to help bring increased discipline and professionalism to Chinese entrepreneurs and Mainland companies.

He said his personal experiences have shown him that Chinese entrepreneurs have an increasingly open mind and attitude towards the way they do business. They are willing to learn about such issues as corporate transparency and governance, because they are starting to realise that by having better corporate governance, the market will give them a greater valuation.

He echoed the view expressed by HKSAR Financial Secretary Anthony Leung during his keynote luncheon address that the territory is well positioned to become a hub for venture capital due to its international status, sound legal system and a well-functioning capital market, which are all key components for getting business deals done.

Summing up the day's conference, K O Chia, executive vice president, Walden International, also said he believed Hong Kong has a number of strengths that it can leverage to bring about a win-win situation for investors and businesses on the Mainland.

"Hong Kong has the ability to commercialise products and successfully market and sell them in the global marketplace. It also possesses a rich source of management expertise, while China has a relatively low cost of labour, " he said.

He believes that venture capitalists and private equity investors need to look at the competitive advantages of different countries or regions in Asia, and then examine how they can combine their strengths to fully optimise their unique advantages. In the technology field, this is particularly important since markets may not be limited to just one area or country, but the entire Asia-Pacific region or worldwide.

Speaking on the state of China's venture capital sector, Allan Homeming, director, PPM Ventures, said it is clearly in transition because of certain external factors. Investors need to be well aware of the changing environment and standards taking place there, including changes to business models and business practices, as well as continuing reforms and changes to laws and regulations in the country.