Private Equity in China: Challenges and Opportunities

CHAPTER 6

Challenges and the Future of Private Equity in China

This chapter examines the unique issues and challenges faced by private equity firms throughout the private equity cycle from fund-raising to exit. Some of these challenges have been discussed in detail in previous chapters of the book; this chapter focuses on challenges that have not yet been discussed.

The private equity industry in China has its own unique characteristics. Foreign and domestic private equity firms face different types of problems when operating in this industry and they need to overcome these problems by constantly adapting to government regulations and macroeconomic conditions.

The continuing growth and increasing importance of the private sector presents many opportunities for private equity. To capitalize on them, one must fully understand the barriers, possible solutions, and learn from the real examples and experiences of other private equity players.

The issues covered in this chapter provide a good overview of the key challenges faced by the private equity industry in general. However, the challenges listed are non-exhaustive. Challenges will remain in the Chinese private equity market. Old challenges may resolve themselves while new problems sprout up as China develops its economic strategies, capital markets, legal structures, and social policies. While maneuvering through this fast-changing, unpredictable climate can sometimes be vexing, many private equity practitioners find it very rewarding ...