Hong Kong Venture Capital Association's chairman Kevin Yip says the SAR's sound banking and financial system contributes to its position as Asia's centre for venture capital management

Hong Kong is set to solidify its position as Asia's centre for venture capital management, as funds managed out of Hong Kong doubled in the first half of 2003 to almost HK$31 billion (US$ 4 billion).

According to Kevin Yip, chairman of the Hong Kong Venture Capital Association, this comes on the back of Hong Kong's core advantages, with its rule of law and robust banking and financial system.

Hong Kong also benefits from its special location at the doorstep of China, as most of the capital going into the mainland passes through the city first.

Currently, the major destinations for venture capital funds managed through Hong Kong were Korea, Japan and the mainland.

"China is a particularly attractive destination for venture capitalists, yet people are wary of the corporate governance risks in China," said Mr Yip.

"Financial investors have to rely on an external regulatory environment in which their interests are well-protected, and Hong Kong is still a number of steps ahead in such matters," added Mr Yip.

Ideal platform for overseas expansion

Besides attracting foreign capital and private equity from external investors, Hong Kong is also very attractive as a centre for fledgling mainland companies to expand into offshore markets.

Vincent Chan, director of JAFCO Investment (Hong Kong) said: "Mainland companies are not only looking for funds and market capitalisation, but they need assistance for their overseas expansion plans. Who can help them the most are the professionals in Hong Kong."

He cited the abundance of talent in Hong Kong, who have gained extensive experience with multinational companies, and are well-versed and disciplined in corporate governance standards.

"Hong Kong is therefore an ideal vehicle for mainland companies to go overseas," added Mr Chan.

He projected a continued demand from mainland companies to access talent in Hong Kong. "There is a consistently strong requirement to come to Hong Kong, to get help to internationalise, and to take advantage of the wealth of experience that local talent can provide," said Mr Chan.

Both Mr Yip and Mr Chan spoke at a recent venture capital/private equity conference, co-organised by the Hong Kong General Chamber of Commerce and the Hong Kong Venture Capital Association.

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