AsiaVest positions itself as the “service provider” for invested companies. What does AsiaVest do specifically?

We actively assist the investment target to consolidate its business partners, develop new customer relationships, set product pricing, establish distribution channels, formulate company strategies, and build its financial system. In addition, we also help the enterprise maximize its benefits in merger and acquisition negotiations.

iSoftStone, one of my projects, was a case in point. We made an agreement with them that if they failed to acquire another software outsourcing company by the day we were supposed to put in our investment, our investment would not take place. This was a triangular transaction.

Last year, iSoftStone acquired three more companies and significantly increased its strength. Despite its original small size, the company has become much bigger through our forced “acquisition model.” Today, iSoftStone has passed Capability Maturity Model Integration 5 (CMMI5) certification and become one of the first Chinese companies with the highest level of software certification. CMMI5 is the highest level of quality certification for the software industry and only 70 companies in the world are CMMI5-certified.

AsiaVest has invested extensively in the chip sector, including SMIC and Anyka Cayman of China, Joint Technology of Singapore, and Inapac of the U.S. Most VCs only favor the top few companies in an industry. Why did AsiaVest invest in so many chip companies?

The chip industrial chain includes design, manufacturing, packaging, installation and sales. The companies AsiaVest invested in belong to different segments of the industrial chain. For example, Montage and Anyka are chip design companies, and SMIC and TSMC are chip-manufacturing companies.

The U.S. National Venture Capital Association (NVCA), after investigating more than 200 VC organizations, published the 2007 Global Venture Capital Forecast Report and identified energy, the media, and the Internet as the main industries for VC investment in 2007. What do you think are the investment hotspots for 2007?

I favor Chinese enterprises with their target markets in China. After all, there are few Chinese enterprises that know how to cultivate overseas markets and understand the rules of the game. In addition to software, semiconductor and media technology, we are also interested in home-appliance chain concept projects. The integration of television and the Internet is expected to drive the development of related industries.

What investment projects did AsiaVest complete in 2006? What are you looking at now?

In 2006, we only completed Montage Technology ($10 million), Jingneng Photoelectric and Opulan. During the second half of the year, we did not complete any projects because we couldn’t find any satisfactory opportunities. AsiaVest does not condone the “spray and pray” approach. The dollar value of our projects is usually quite large, from $7 million to $30 million. We have to be very cautious.

I have been evaluating many sectors recently, particularly in the new and alternative-energy sector. After researching numerous enterprises, I hope I can find some that are worth investing in. I will not invest in solar energy, however, because there are already four listed Chinese solar-energy companies. It is unlikely the capital market will show any more interest in this sector.

Up to now, how many cases has AsiaVest invested in? How are the regions and industries distributed?

AsiaVest has invested in more than 200 companies based on the Chinese mainland, Hong Kong, Taiwan, Singapore and the United States, with investments totaling almost $700 million.

We planed to invest 80 percent of our third-round funds totaling $300 million in mainland enterprises. About $150 million is still available. We will not invest in new cases in the United States and there will be few investments in Singapore. Almost all of the remaining funds will target China concepts-we want to focus on Chinese projects.

You have worked in the VC business in the United States before. What problems do you think are special to Chinese enterprises?

First, the “me too” phenomenon is common among mainland enterprises. For example, many “focus media” companies suddenly appeared after the success of Focus Media-JZ Media, Target Media, and Time Share Media.

Another problem is the shortage in the professional management pool on the mainland. Enterprises are always managed by the family due to traditional Chinese thinking. This is very unusual and will seriously impair enterprise growth. There are many professional managers in Taiwan. We hope to bridge the gap and introduce more Taiwan managing personnel to work at these enterprises.

There is yet another problem. Both Taiwan and the mainland are typical of M-shape societies [where there are two extreme economic pecking orders without a middle class-Kenichi Ohmae]. There are many rich and poor people, but few in the middle class. Everybody wants to get ahead of everyone else; and some even use extreme measures to get what they want. It is quite peculiar.