ChinaVest Diary

21 April 2008

Founded in China by Americans over a quarter century ago, ChinaVest today is a leading merchant bank with offices in Shanghai, Beijing, Hong Kong and San Francisco. It has operated in China longer than almost any other firm in its sector, concurrently developing keen market intelligence and essential relationships with both the business community and with the government.

As a financial intermediary, ChinaVest assists foreign multinational companies, local Chinese firms, private equity funds and other investors evaluate and execute cross-border transactions. As well, it invests as a principal in Chinese enterprises, alongside other institutions.


According to the World Bank, China's economy grew at an average growth rate of 9.6% from 2000-2005

Average growth rates of major economies 2000-2005







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Latest entry #40

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ChinaVest Briefs

40. Taiwan's Fubon Financial Acquires Stake in China's Xiamen City Commercial Bank


April 08

ChinaVest has reported on developing trends between Taiwan and China. Huge growth opportunities in China are being driven by Taiwanese companies and entrepreneurs operating there despite restrictions on Taiwanese direct investment. But winds of political change are gathering momentum. In less than two weeks following the China-friendly


 Kuomintang Party's Ma Ying-jeou becoming President of Taiwan, Fubon Bank's plan to invest US434 million in Xiamen City Commercial Bank received the the blessing of the Taiwan's top financial regulator. The removal of the ban on Taiwanese banks directly investing in mainland China banks will no doubt create further opportunities.

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39. The Changing Private Equity Landscape in China


14 March 08

Dynamic changes have taken place within the Chinese investment landscape since ChinaVest launched its first institutional investment fund in 1983. The seeds of change were planted in the 1980s by Deng Xiaoping via the creation of Special Economic Zones located in proximity to Hong Kong. But events quickly gathered momentum when China joined the World Trade Organization in 2001 and the central government began to sell off assets and create a regulatory system. A flood of foreign private equity found Chinese firm’s desperate for capital; private equity/venture capital money poured into China at a compound annual growth rate of 134% from 2002 through 2006.

But Chinese regulators have evidenced wariness at the trends. Due to nationalistic pride, concerns of social unrest due to potential layoffs and bulging Chinese coffers, obstacles to foreign investment are emerging. Certain industries, including banking and airlines, have strict limits on foreign ownership while others require approvals from complex combinations of the central government and industry regulators. There have been notable examples of failed deals, including Goldman Sach’s planned investment in Fuyao Glass.

Despite rising hurdles, look for growing levels of private equity investment in China. The country  is


somewhat insulated from the developed world’s economic malaise and private investment relative to GDP is at very low levels. New creative investment strategies will help spur private investment, “including bridge loans, PIPE deals (when private equity firms acquire stock in public companies) and mezzanine financing (convertible bonds and other quasi-equity financing).”

Further creativity will be required, as a rise in domestic/local private equity funds from zero just a few years ago to 12 today provides a newly developing competitive threat to foreign investors. And regulations requiring deals be done in the renminbi will make it more difficult for foreigners. Industrial Development and International Domestic funds, both deemed to be Chinese investment vehicles, are also being encouraged by the Chinese government.

“China’s private equity market will remain vibrant in 2008.” But the landscape is changing such that foreign investors will increasingly find themselves disadvantaged relative to local investment pools. There are, however, dangers to the Chinese economic system of putting “too much emphasis on the local private equity”, and countless millions of entrepreneurs have created an “economic juggernaut, an inertial force unparalleled in modern history.”

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38. ChinaVest Publishes Weekly Investment Trends Newsletter


Oct 07

ChinaVest has leveraged its research capabilities to publish a weekly newsletter that provides a comprehensive look at all of the latest events in China, including reviews of general economic


news, IPOs and M&A activity. For past issues, please visit ChinaVest’s Research Library. To sign up to receive the weekly letter via email, visit its signup page.

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37. Merchant Bank Activities

Oct 07

Entries after 2002 refer to the Merchant Bank based in Shanghai, and not to the private equity ventures which are part of an entirely separate


organization. For a short history of merchant banks, consult Merchant Banks.

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36. Forbes interviews Robert Theleen on changing investment trends in China

Capital Markets & Investing; China's new model; by Andrew Tanzer

23 Dec 02

The full article is only available in Forbes print edition.

Mr. Robert Theleen has witnessed major changes in China's business environment over the last several decades, both as a consultant to multinationals and as founder in 1983 of the first private equity investment company to target China, ChinaVest. Originally, ChinaVest ignored conventional western perceptions of China as a consumer market by following overseas Chinese entrepreneurs into China who viewed China as a producer. Zindart, a Nasdaq-listed (ZNDT) manufacturer of die-cast collectibles and pop-up books, remains a ChinaVest portfolio company.

Since its founding, ChinaVest has grown to manage $300 million. Investment in early-stage companies normally runs between $2 million to $5 million. With more mature investments, ChinaVest is willing to pony up between $5 million and $15 million. Despite setbacks, ChinaVest's "funds internal rates of return have averaged close to 25%, which would place them in the top quartile of Silicon Valley VC funds." Last year, ChinaVest sold its stake in Alphatop, a maker of Macintosh laptops, after tripling its $3.5 million investment in just two and a half years.

The next wave of investment consisted of native Chinese returning with foreign education and work experience. Ironically, the Tiananmen Square incident in 1989 propelled this trend, as many Chinese found themselves stranded overseas. ChinaVest supported several such returning entrepreneurs, including AsiaInfo (Nasdaq: ASIA) -- proprietary telecom software


for building out China's Internet, NewTone -- telecom-switching software, and Medio Stream -- video-compression software.

Now, Theleen is looking to "homegrown entrepreneurs" from Chinese Universities, "a hotbed of entrepreneurism and a center for intellectual creativity." ChinaVest acquired a 20% interest for $3 million in ServGate Technologies, an Internet security company that drew on technology developed by Beijing's Tsinghua University.

ChinaVest is investing beyond technology and telecom into logistics, distribution, and branded consumer goods and services. Linking producers and consumers is a key to developing China as a national marketplace, a view Theleen calls "China horizontal." ChinaVest portfolio companies targeting logistics and distribution include Tait Asia, CV Global Logistics, and Chic Logistics.

ChinaVest also holds franchises for Domino's Pizza and TGI Friday's, and it will be rolling out China's first foreign radio station in conjunction with Richard Branson's Virgin Radio. Theleen expects the 2008 Olympics to help introduce China's branded products to the world community. Branding is also expected to get a boost from younger entrepreneurs who aren't as tied to family control.

Theleen comments that a key issue for venture capitalists in China is developing exit strategies. But from a macro economic perspective, "building a modern banking system is the leading challenge facing economic planners."

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35. Michael Brownrigg highlights opportunity in China in work with Stanford University professors and students

Stanford University Fall 2001 Seminar/Public Lecture Series

Topics in International Technology Management

29 Nov 01

For full release, see

In a slide presentation prepared for working with Stanford University professors and students, Mr. Michael Brownrigg, ChinaVest partner, chronicles China's historically repressive economic policies that were accompanied by periodic famines. But Deng's liberalizing reforms dating to 1979 unleashed "startling" success. China's entry in the World Trade Organization and its hosting the Olympics will likely spur further progress. Challenges do remain, primarily banking, governance, legal structures, and manpower. From a "macro" perspective, China has experienced strong economic growth and a surge in foreign direct investment, while at the


same time keeping foreign debt to a minimum. From a "micro" perspective, Mr. Brownrigg speaks of the trust and family oriented business structures found in China as compared with the law- and corporate-based relationships found in other developed cultures. In addition to untapped consumer markets, China is experiencing "dynamic growth" in its information industry, "surging demand" for sophisticated distribution, and a "shift of hi-tech manufacturing from Taiwan to China." He summarizes his presentation by quoting The Economist (March 10, 2001) saying the "most stunning economic event of the past century" is the economic growth of China "since it opened up" in 1979.

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34. AsiaInfo reports on Q2; sees delays in China's telecom reorganization

AsiaInfo Holdings press release

23 Jul 02

For full release, see

AsiaInfo Holdings (NASDAQ: ASIA) reported second-quarter results for the period ended June 30 that showed year-over-year and sequential gains. The company, the leading provider of telecom network integration and software solutions in China, is expected to benefit from the country's low penetration rates for fixed-line and cell phones as well as renewed competition between China's two largest telecom companies. China Telecom and China Netcom were split into separate companies May 16, 2002, in a move


that is expected to lead to an upswing in spending as they respond to the newly competitive environment (see citation #28). But the industry reorganization appears to be taking longer than expected, so AsiaInfo management scaled back near-term expectations while at the same time began instituting cost-cutting measures. The firm's balance sheet is outstanding, but the earnings release broke as world markets were in rapid decline, thus taking ASIA shares to new lows and near book value. AsiaInfo Holdings is a portfolio company of ChinaVest.

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33. Halcyon Software merges with Stryon; creates leader in legacy application migration software and services

Stryon press release

18 Jun 02

For full release, see

Stryon ( has merged with Halcyon Software. The new company will focus on developing software that will help businesses move their older software, called legacy software, to newer operating environments. The merged company, retaining the name Stryon, is closely affiliated with The CyberNET Group, a global systems integration firm with operations


throughout North America, Europe, South Africa, Asia, and Australia. CyberNET CEO Barton Watson comments, "The merger with Halcyon brings tremendous capabilities to Stryon" as it "can now provide a scope of application services never before available to middle market companies and enterprise accounts." Halcyon is a portfolio company of ChinaVest.

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32. Michael Brownrigg of ChinaVest co-authors report on International Property Rights

Pacific Council on International Policy

Jan 1998

For full report, see

The Pacific Council on International Policy sponsored a study group in 1998 that examined how the U.S. might best foster the development of international property rights. Mr. Michael Brownrigg, then vice president of ChinaVest, co-authored the final report. The 58-member group concluded that a "cooperative public-private effort(s)" was needed not so much to develop "dramatic new policy initiatives," but to ensure that existing "international intellectual property


protections are promptly and fully implemented." The report includes 10 specific recommendations that generally revolve around the theme of a cooperative public-private sector effort to champion the fundamental benefits to all nations of protecting international property rights while at the same time not shying away from aggressively, though judiciously, using available legal remedies. Mr. Brownrigg is a partner at ChinaVest.

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31. ChinaVest's Michael Brownrigg cites impact of China's fast-changing economy on different age groups

Stanford University's Asia Technology Initiative 2001


ATI Shanghai 2001 home site

Mr. Michael Brownrigg, a ChinaVest partner, started his talk at ATI 2001 in conjunction with ATI Shanghai 2001 with a short review of Chinese economic history. He went on to address the different impact that the country's history has had on three age groups, 70+, 40-50s, and 40 and under. The latter group is generally the least affected by the country's storied past and the


most likely to embrace Western business practices. Family ties, as contrasted with western corporate cultures, continue to be important in China. As such, there remains a need to build strong personal relationships with Chinese entrepreneurs. Mr. Brownrigg expanded on ChinaVest's, the oldest venture capitalist firm in China, evolving pattern of relationships in China.

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30. Robert Theleen speaks of China's "dynamic internal market."

Global Province

Jun 02

A "lack of ideas" from corporate America coexists with a "vacuum in political thought, both in the United States and abroad." According to William Dunk's 2002 Annual Report on Annual Reports. Against this backdrop, "the very fact that the Chinese leadership is searching for a new ideology is testimony to the refreshing and rather singular realism with which it is confronting all its problems and opportunities." ChinaVest's chairman, Mr. Robert A. Theleen is quoted as


saying, "The top echelon of this (Chinese) society knows where it has to go and that surefootedness is radiating far and wide about the countryside." Mr. Theleen states that China's newer "bottoms-up entrepreneurial style" will be leveraged by the country's entry into the World Trade Organization and its hosting of the Olympics to create "a more dynamic internal market driven by consumer branding and a next-generation distribution system."

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29. eOn Communications earnings report reflects soft market but strong financials

eOn Communications press release

29 May 02

earnings release:

Commenting, "The signs of recovery in the US economy have not yet trickled down to the market for communications products and services," eOn Communications (Nasdaq: EONC) reported lower revenues and a loss for its third quarter of fiscal 2002 ended April 30. During the quarter, the company signed up new customers, including iVox LLC and Ansafone Communications, and won follow-on business with NAV Canada, PETsMART, Circuit City Stores, and Lillian Vernon. eOn also "signed an integration and reseller agreement with N'ser Community" that will allow it "to address the


newly emerging multi-channel contact center solutions market in Korea, China, Taiwan, Singapore and Indonesia." Troy Lynch, eOn's president and chief executive officer, is reluctant to provide specific guidance for the fiscal fourth quarter, but he has seen "some positive signs recently, and we are encouraged by our increased pipeline activity." He expects a "modest sequential improvement in revenues and earnings." The release reports the company to have $0.83 per share of cash and marketable securities, and the balance sheet shows no long-term debt. eOn Communications is a portfolio company of ChinaVest.

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28. China Telecom breakup to spur demand for AsiaInfo's system-integration products

The Wall Street Journal; International Section

In China Telecom Breakup, Opportunity Galore

16 May 02; page A12; by Matt Pottinger

The Wall Street Journal reporter Matt Pottinger reports on the "long-awaited breakup of China Telecommunications." Following the breakup, China Telecom will control "21 provinces in China's South and West," while China Netcom Group "will control 10 provinces in the North." The split is expected to kickoff a new wave of investment in software and equipment. Chief strategy officer at AsiaInfo Holdings, Fan Bao,


believes that the breakup "will spur demand for new equipment and software to provide call-waiting, voice-mail, short-messaging and Internet service for China's 190 million fixed line customers." Mr. Pottinger notes that AsiaInfo is a Nasdaq-listed (ASIA) systems-integration company whose biggest client is China Telecom. AsiaInfo Holdings is a portfolio company of ChinaVest.

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27. Consumer borrowing creates "seismic" shift in China's growth engine

The Economist; Finance & Economics

Asia's consumers are at last starting to spend and borrow. A boon for Asia's banks?

20 Apr 02; pages 69-70

The Economist describes it as "a seismic shift in the region's economics, banks and consumer patterns." An American investment banker calls it "the single most powerful theme in Asian Financial services." They are talking about an increasing willingness of Chinese consumers to borrow and of Chinese banker's enthusiasm to lend. "And the trend is not confined to plastic. Home mortgages, car loans, unsecured credit; all forms of consumer finance are soaring, albeit from a small base." This


shift toward consumerism stands in contrast with the "the export-led development . . . based on high rates of saving and investment" model of recent decades. While not without infrastructure challenges, China's savings rate of 40% -- one of the highest in the world -- and falling cultural barriers toward borrowing should continue to fuel the rapid growth in outstanding consumer loans. ChinaVest has an investment interest in Prime Credit, a Hong Kong-based financial services company.

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26. "Wondrous Impatience" triggered twenty years of near double-digit growth; but the strategies for success in China are shifting

A Speech by Robert A. Theleen, Chairman, ChinaVest, Inc.

"Wondrous Impatience; A Twenty-Year Perspective on Investing in China"

13 Apr 02

for entire text of speech, see:

In a speech to "the most distinguished and knowledgeable gathering of scholars, of business men and women, and of members of government of the entire Asia-Pacific Region," ChinaVest's Chairman, Mr. Robert A. Theleen, follows "investment flows" in order to help explain why "China has been so successful in developing investment capital over the past twenty years." The gathering took place at the BOAO Forum For Asia 2002 Annual Conference held in Hainan, China. Mr. Theleen draws on his roughly 25 year experience, including the founding of ChinaVest in 1982 as the "first American private equity investment fund dedicated to China," to articulate the "micro economic and political events" that produced "one of the most massive and continuous flows of capital into any country in modern history."

Mr. Theleen attributes the speed with which China has evolved -- twenty years of near double digit growth -- to "wondrous impatience," the development of an "ad hoc" decision making process "which ensured that infrastructure needs and bureaucratic processes did not interfere in GDP growth." Specifically, he cites an "unspoken covenant between government officials . . . and the overseas Chinese entrepreneur;" China's willingness "to import foreign legal systems;" a recognition "that a stable currency was key to growth and economic confidence;" and "the freedom of the consumer to choose." As a result,


foreign direct investment (FDI) in China was tens times that of Japan over the last ten years, and, "at the end of 2001, FDI in China totaled more than $50 billion, approximately 25% of the world's total FDI."

Looking forward, Mr. Theleen reports that he's seen evidence that China's entry into the World Trade Organization "is already accelerating investment and capital flows into China." And he feels that the Beijing Olympics of 2008 could well usher China into the international community as the Olympics of 1964 and 1988 did for Japan and Korea, respectively.

Noting that "those who have had less than spectacular returns in China find themselves caught up with yesterday's assumptions rather than today's realities," ChinaVest is "looking at alternative sources of finance to supply to the changing scene of China's financial needs." In the 1980s China was a producer; then in the 1990s it turned to consumerism; and in the late 1990s China became a participant in technology, IT, electronics, and telecom. Today, ChinaVest has built its "strategy on the concept of the Chinese economy moving from the vertical to the horizontal." But more importantly, the firm's "bet is, as it has been for the past 25 years, on the Chinese entrepreneur, no longer the overseas version. But the 2002 model -- highly educated, at home and abroad, highly motivated to succeed, like his overseas cousin, and very well poised to develop the network of relationships in and out of China as this economy continues to shine."

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25. AsiaInfo Holdings' first quarter operating profit driven by high-margin software and services

AsiaInfo press release

24 Apr 02

earnings release:

Commenting that he continues "to see the positive impact of our long-term strategy as a full service telecom provider," Mr. James Ding, AsiaInfo's (Nasdaq: ASIA) President and CEO, comments that, "We are very pleased with AsiaInfo's results this quarter." For its first quarter of 2002 ended March 31, the company posted a "higher than expected operating profit of US$1.1 million, significantly higher than the company's loss of US$23,000 a year ago." After adjusting for the cost of hardware, net revenue rose 20% over the year-earlier quarter to US$17.1 million. The net revenue backlog rose 16% over the prior year and was flat on a sequential basis despite a traditionally slow first quarter. The recent


acquisition of Bonson Information Technology "confirmed our position as a clear leader in telecom operation support systems (OSS) solutions." A number of new contracts with a particular interest in OSS were announced in the first quarter, including contracts with China Netcom, China Mobile subsidiary and Guangzi Mobile, China Railcom, Shanghai Mobile, and Shanzi Mobile. Going forward, AsiaInfo is expecting second quarter results to reflect year-over-year net-revenue and operating-income gains of 20% and 42-44%, respectively. Net income is projected to come in between $0.07 - $0.08 per basic share. AsiaInfo Holdings is a portfolio company of ChinaVest. AsiaInfo Holdings is a portfolio company of ChinaVest.

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24. ChinaVest moves offices to historic Bund

Company sources

01 Mar 02

ChinaVest has moved its Shanghai Headquarters to one of the most venerable buildings on the Bund, considered by some to be among the most spectacular streets in all of Asia during the days of Old Shanghai. The building once housed the Shanghai headquarters of the Hongkong and Shanghai Banking Corporation, and at sundry times the building has housed parts of the Shanghai Municipal Government. Today it is called the Pudong Development Bank building. The building, its architecture a blend of art nouveau and art deco, remains a pillar of


endurance and a key financial link to the growing Chinese market. Since its construction in 1925, the building has served as a center for vibrant commercial activity for which Shanghai, China's New York City, is so well known. The new address is:

Suite 336 Bund Building

No. 12 Zhong Shan Dong Yi Road

Shanghai 200002

For more on this historic building, click

For more on the historic Bund, click

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23. Some ChinaVest portfolio companies

AsiaInfo Group Holding

CVCS Holdings

Chic Logistics

eOn Communications

Excel Technology Holdings


Newtone Communications

Portelco Communications

Prime Credit (Advantage Holdings)

Quanta Holdings


Single Chip Systems

Stream Machine



Tait Asia

Virgin (Asia) Management


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22. From thousands of worldwide venture capitalists, Forbes spotlights ChinaVest as one of 50 active firms

01 Apr 02

In an April 1 piece titled "The money list," Forbes lists a group of 50 venture capitalists that it selected "from the thousands of venture capitalists in the world." Forbes also lists some of each firm's "better know deals." ChinaVest is further


recognized by its focus on the Asian market. Among its better know deals, Forbes lists Asia Info Holdings (Nasdaq: ASIA), Virgin Atlantic, and Zindart (Nasdaq: ZNDT). For the entire listing, click here.

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21. China's large, skilled labor pool draws continued manufacturing investment, even in high technologies

The Wall Street Journal; page A1; by Peter Wonacott

14 Mar 02

Mr. Peter Wonacott reports that, attracted by an abundance of cheap but increasingly skilled labor, "Foreign direct investment in China last year totaled $46.8 billion, . . . up 15% from 2000." The supply of skilled workers is being fueled by China's vocational schools "offering more engineering classes" and by universities "where 37% of graduates in 2000 were engineers." And though demand for skilled workers is on the rise, some foreign investors believe that wages will remain favorable for another 10 years. "The decisive factor is the pool of labor." Mr. Wonacott points out that, "For many, the opportunities in coastal areas favored by foreign investors and bolstered by economic reforms are


a step up no matter how low the wages."

The advantages of a large and growing pool of low-cost, skilled labor applies not only in toys and less complex manufacturing but also in a broad range of high technology products. In some cases, the low labor costs make China one of the most profitable "countries in which (to) operate." This is attracting investment by multinational corporations: Motorola along with its partners and suppliers plans to invest $6.6 billion over five years; Japan's Hitachi will increase its already substantial investment by another $800 million over five years; and Intel plans to double its Shanghai investment by spending $302 million.

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20. Goldman Sachs putting up to $1 billion of private equity in Asia, even as other institutions pull out

The Wall Street Journal; Deals & Deal Makers Section; page C16; by Henny Sender

12 Mar 02

Henny Sender reports that while California's public-employee pension fund, Calpers, is pulling out of Asia, Goldman Sachs is returning to the region by "putting up as much as $1 billion in new private equity money for Asia." The money is "part of a new $5.25 billion fund that Goldman recently raised." Goldman Managing Director


Henry Cornell, who led the firm to a string of successful Asian investments in the mid-1990s, is returning to oversee the firm's new investments. He will be targeting "stakes in traditional businesses," particularly non-technology. ChinaVest focuses on Greater China, roughly encompassing those parts of Asia with a substantial Chinese business community.

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19. SurfMonkey transforms to fee-based web-filtering service for kids

Investor's Business Daily; Internet & Technology Section; page A7; by Pete Barlas

5 Mar 02

Pete Barlas chronicles SurfMonkey's evolution from a free, ad-supported kid's content site to a fee-based Web-filtering service for kids. The firm's browser-based service prevents children from accessing adult-content web sites as well as blocking unauthorized "visitors from contacting children through electronic mail or chat rooms." To market its product, SurfMonkey took "an unusual tack" by selling its product "through partnerships with Internet service providers (ISP)." To date, the company has landed contracts with EarthLink in the U.S., British Telecommunications' BTopenworld, and Japan-


based NTT Communications. Customers, about 5,000 in each market, pay $3.95 a month that SurfMonkey splits with the ISP. EarthLink chose SurfMonkey in order to save money while it competes with its biggest rival, AOL. Arley Baker, an EarthLink spokesman, states, "We looked for the best-of-breed technology so we don't have to build our own applications." SurfMonkey's CEO, Charles Hart, "expects SurfMonkey to have up to 500,000 subscribers worldwide by the end of the year." ChinaVest has an investment position in SurfMonkey.

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18. eOn Communications, "encouraged by the level of renewed activity," reports fiscal second-quarter results

eOn Communications press release

28 Feb 02

eOn Communications (Nasdaq; EONC) announced fiscal second-quarter results. Revenues were crimped by seasonal weakness in the firm's contact center business and general economic weakness that led to extended sales cycles. Looking forward, management is "encouraged by the level of renewed activity among our customers and prospects for deploying contact center solutions," particularly, "The need for call centers to convert to multi-media contact centers is greater today than it has ever been." The bottom line improved, as evidenced by an $0.11 per-share loss versus a loss of $0.44 in the year-ago period. The balance sheet shows more than $11 million in cash and marketable securities and no long-term debt.

During the quarter, eOn booked new business


from existing customers, expanded its partnerships and alliances, launched a new Millennium Partner Program to deliver new products and services to preferred partners, and "added three new channel partners to resell the eQueue Multi-Media Contact Center Solutions and Millennium Digital Communications Platform." Five awards were received during the quarter, including "one of only 15 Product of the Year Awards from Communications Convergence magazine for the eQueue." And appropriate forms were submitted to the Securities & Exchange Commission for the pending spin-off of the company's wholly owned Caribbean/Latin America service and distribution subsidiary, Cortelco. eOn Communications is a portfolio company of ChinaVest.

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17. Important links for business leaders along the Pacific Rim

The following is a list of sites that will be useful to those engaged in commerce between Great China and the United States. Many more links will be added in the future.


Asia-Links serves as a bridge between Asia, the U.S., and Europe by providing information, technology and eCommerce services for the electronics and high tech industries.


The home of Asiamoney magazine, including editorials by the team and special community sections that draw together relevant content from across all the international finance titles of Asiamoney's parent company, Euromoney Institutional Investor PLC, as well as selected third-party sources and sponsors.

Council On Foreign Relations

Founded in 1921, the Council on Foreign Relations is a nonpartisan membership organization, research center, and publisher dedicated to increasing America's understanding of the world and contributing ideas to U.S. foreign policy. The Council accomplishes this mainly by promoting constructive discussions both in private and in public, and by publishing Foreign Affairs, the leading journal on global issues.

The Asia Foundation

Utilizing its 47-year presence throughout Asia, The Asia Foundation collaborates with partners from the public and private sectors to build leadership, improve policy and regulation, and strengthen institutions to foster greater openness and shared prosperity in the Asia Pacific region.


The Center For The Pacific Rim

Recognizing the San Francisco Bay Area as the pre-eminent American gateway to the Pacific, the Center promotes understanding, communication, and cooperation among the nations, peoples, and economies of the Pacific Rim through academic degree programs, public events, publications, research, and scholarly exchange.

SINA is a leading Internet media and services company for Chinese communities worldwide, offering global Chinese-language content, commerce and community services to four localized Web sites targeting China, Hong Kong, Taiwan, and overseas Chinese in North America.

Singapore Venture Capital Association

The Singapore Venture Capital Association was formed in 1992 under the patronage of the Economic Development Board to promote and foster the growth in venture capital and private equity within Singapore's financial services industry.

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16. U.S. News and World Report examines China's key role in world economy

U.S.News & World Report

11 Feb 02; page 42; by Joshua Kurlantzick

U.S.News & World Report spotlights Globalism in its Money & Business Section. In The China Question, Joshua Kurlantzick takes a close look at the risks and opportunities in China. While recognizing that a "massive divide between high-tech Hangzhou and low-rent Yunnan" evidences "cracks" in China's "gold-plated surface of the bustling coastal cities," the author goes on to make the case that at least "for now, the enormous wealth disparities within China actually


benefit the country's economy." Issues of privatization, financial regulations, and developing capital markets will all have to be managed adroitly, but "most foreign business people believe the Middle Kingdom will mature into a responsible trading partner." Jun Zhao, vice president of ChinaVest, comments, "Other than America, China is the only real continental economy in the world, with huge varieties in salaries" which "puts it in a league apart from countries like Taiwan or even Japan."

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15. Speeches by Robert Theleen, ChinaVest Chairman

The following is a partial list of some of the more recent speeches by Robert Theleen before sundry organizations concerned with Asian business and American-Asian affairs.

2002 April


2001 November

2001 Asian Venture Forum

2001 August

Singapore Venture Capital Association

2001 May

IFC Global Private Equity Conference

2001 April

Pacific Council on International Policy

2000 October

Pacific Council on International Policy

1999 December

Council on Foreign Relations -- cosponsored with Pacific Council on International Policy

chaired study group!1883

1998 November

UC Berkeley's Center For Chinese Studies

1998 April

World Affairs Council

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14. AsiaInfo Holdings reports financial results and moves, via acquisition, to number one position in key Chinese wireless market

Company press releases

22 Jan 02

financial results:


AsiaInfo Holdings (Nasdaq; ASIA) announced fourth-quarter and year-end results for the periods ending 31 Dec 01. The company "continued to demonstrate strong growth in the fourth quarter" by reporting record operating profits and net income. The US$4.3 million in net income exceeded analysts' average expectation of US$3.83 million. Management expects the momentum to continue, as they are projecting a 70% jump in operating profit for 2002. The release spotlights the announcement of six new contracts and the release of two new software products during the quarter. Mr. Ding, President and CEO of AsiaInfo, comments, "With a full suite of telecom software solutions and an extensive customer installation base, AsiaInfo is best positioned to help China's telecom carriers succeed" in an "increasingly


competitive" telecom market. AsiaMoney, a leading financial magazine, named AsiaInfo as "one of China's Best Managed Companies."

In a separate release, AsiaInfo announced its plans to acquire Guangzhou-based Bonson Information Technology for $47.3 million in cash and stock. Bonson provides "telecoms operations support systems used to run communications networks in China." Its "main customer is China Mobile," the mainland's biggest cellular carrier. The acquisition of Bonson will vault "AsiaInfo to undisputed number one position in the wireless BOSS (telecom operation support systems) market in China." It is expected that the acquisition will be immediately accretive, adding 8-10 cents to 2002 earnings per share. AsiaInfo Holdings is a portfolio company of ChinaVest.

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13. The Asia Foundation spotlights America's role in the rapidly developing Asian marketplace

The Asia Foundation

copyright 2001

Fastest growing, vital, profound, positive trends, market economy, liberalization, and democratization all come from a task-force report that was commissioned by The Asia Foundation in early 2000 and published in 2001. The task force was commissioned to examine "the challenges facing the United States in Asia and to recommend policy initiatives for the new administration and Congress." Mr. Robert Theleen, Chairman of ChinaVest and Trustee of The Asia Foundation, participated in the study. In addition to spotlighting the enormous growth in U.S. private equity in Asia -- going from $300 million to $400 Billion in 20 years -- the


report presciently speaks of the need to be "involved in preventing the India-Pakistan dispute from escalating into armed, even nuclear, conflict." It also speaks of the need to "Take a more active role in helping to resolve the Kashmir and Afghan disputes." An executive summary reviews six "Trends that could threaten U.S. interests;" three "Trends that could support U.S. Interests;" and 13 summary "Recommendations."

For a list of members of the "America's Role in Asia," click here: task force members

To order "America's Role in Asia" from the Brookings Institution for US$10.95, please click here: order

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12. Stream Machine, a ChinaVest portfolio company, is acquired by Cirrus Logic

Cirrus Logic press release

10 Dec 01

Cirrus Logic, "the premier supplier of high-performance analog and DSP chip solutions for consumer entertainment electronics," completed the acquisition of Stream Machine. Stream Machine is "a leading supplier of MPEG-2 video recording technology." The firm's "proprietary video-compression technology provides high quality video for multiple home entertainment applications, such as DVD recorders, personal video recorders, digital camcorders and PC video peripherals." Cirrus


Logic's web site describes ChinaVest as being a "Major Investor" in the company. ChinaVest is a venture-capital firm providing "long term investment capital and management experience to growing companies doing business in or with China, Hong Kong and Taiwan" Other investors included the Mayfield Fund, Tallwood Venture Capital, Vertex Management (II) Pte. Ltd., Bessemer Venture Partners, and the WI Harper Group.

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11. ServGate, a ChinaVest portfolio company, secures $8.6 million in development funding

ServGate Technologies press release

30 Nov 01

ServGate Technologies announced that it has received $8.6 million in development funding from a group "led by ChinaVest, a San Francisco and Beijing-based venture capital firm overseeing more than $300 million in investments." Other investors include Kingston Technologies and Pac-Link. ServGate's flagship product, the SG2000 is a high-performance security gateway considered to be the "world's fastest firewall."

See for additional product details.

"ChinaVest invests in high-growth companies who do business in Greater China or who wish to introduce their products to the Chinese market."

ServGate will use the money for product


development and for building "a worldwide sales and support organization." Michael Brownrigg, Vice President and Partner of ChinaVest, comments that ServGate has "a huge opportunity in China and throughout Asia (because) most enterprises are under-secured." He further believes the firm's "superfast service provider-level security gateways are perfect for very high bandwidth users and network operators in North America and Europe." Dr. Rick Schaffzin, President and CEO of ServGate, states, "This level of funding enables us to maintain our high rate of growth, deliver our products to market, continue development of our next-generation platforms, and build the sales and customer service arms needed to support the demanding base of leading enterprises and service providers."

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10. AsiaInfo Holdings, a ChinaVest portfolio company, mentioned in article on China's evolving equity markets

Wall Street Journal; page C1; by Craig Karmin and Karby Leggett

09 Nov 01

While risks remain, WSJ staff reporters highlight the progress being made toward liberalizing China's equity markets. Private companies continue to face obstacles accessing the equity markets, including "the communist party's lingering ambivalence toward the private sector," but they are finding it increasingly easier to tap the market for funds. They still fall short of their economic contribution -- "private companies now account for nearly half of China's economic output" -- but "in the past two years, the Chinese government has begun allowing private companies to go public." Some fund managers consider this small


cadre of companies, such as Nasdaq-listed AsiaInfo Holdings (ASIA), to "offer a unique opportunity for U.S. investors who are hungry to gain exposure to China's giant economy but have been reluctant to sink their money into poorly managed state-run companies." While China's entry into the World Trade Organization might well provide further impetus to privatization, pressures remain on regulators to give priority to state-run firms. "So more of China's fastest-growing private firms are turning to overseas markets for investment, giving foreign investors at last a chance to cash in on China's economic re-emergence."

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9. Investing in growing Chinese market; follow the lead of Global Companies; by Daniel Kadlec

25 Oct 01

While acknowledging the volatility of Chinese stocks (B shares open to foreign investment fell 34% since May but have tripled in four months and are up 73% year to date), David Kadlec focuses on the "huge long-term promise" of investing in China. China's economy is "growing 7% annually" without inflation, and its about to get more attention by virtue of entering the World Trade Organization and hosting the 2008 Olympics.

William Dunk, a Dallas-based management consultant, is quoted as saying, "If you're serious about growing, you've got be there." He argues that it would behoove investors to follow the lead of major U.S. corporations that are committed to China, including Coca-Cola, GM, IBM, Motorola, and Proctor & Gamble. Robert Theleen, who's been investing in China for


20 years through his venture capital firm ChinaVest, goes further to pint out that" China is Kodak's second-largest market for film and will probably be No. 1 within a year or two." He believes "The big story now is the emerging domestic service economy that will set China apart from other Asian economies. Manufacturing, mainly for export, is well developed throughout Asia."

Mr. Kadlec suggests that individual investors go slowly despite "Chinese regulators cracking down" on manipulative trading practices, as China's capital markets "are underdeveloped; disclosure requirements and investor protections are shoddy; and the rules are baffling." He recommends investors look to global consumer products companies, mutual funds targeting China, ADRs of Chinese companies trading in the U.S., and for the more aggressive, direct investment in Chinese B shares.

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8. ChinaVest Considering New Asian Venture-Capital Fund

03 Oct 01 reported today that ChinaVest is considering creating its sixth venture-capital fund. According to the firm's Vice President, Michael G. Brownrigg, ChinaVest is considering targeting Asian-market investments "in logistics, IT, and media, and could possibly extend into healthcare services."

The company has deployed about two thirds of


the $100 million that it raised in its fifth fund during 1998. While remaining "cautious," ChinaVest recently invested $5 million in Virgin Radio Asia, a provider of FM radio throughout Asia. Overall, ChinaVest manages over $300 million. Other recent investments include NewTone Communications, a telecommunications provider, Serve Gate, a provider of firewall applications, and Sheik Logistics.

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7. Alpha-Top merges with Tiawan-based Elitegroup

Reuters English News Service

14 Aug 01

At a time that companies are finding it strategically advantageous to maintain their competitive edge via mergers and acquisitions, it was reported today that Elitegroup, a Taiwanese-based maker of motherboards, announced its intention to acquire the nearly 80% of unlisted Alpha-Top


that it doesn't currently own. The acquisition calls for Elitegroup to exchange one Elitegroup share for each 3.5 Alpha-Top shares in a deal worth US$179 million. The merger is to take effect December 15. ChinaVest has an investment position in Alpha-Top.

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6. ChinaVest teams with Sir Richard Branson to create Virgin Radio (Asia) Limited

Virgin Group release

26 Jun 01

It was announced today that ChinaVest has agreed to take a stake of up to 25% in Virgin Radio (Asia) Limited, a network of Virgin FM radio stations throughout Asia. Robert Theleen, Chairman and Founder of ChinaVest will join the new firm's board of directors. Discussions are "already underway for the company to acquire equity interests and management control in existing radio stations in several Asian markets, including Hong Kong SAR, Singapore, Taiwan, The People's Republic of China, Thailand and India." The new concern will initially focus on


"Greater China, Thailand and India, ultimately establishing a presence throughout Asia, excluding Japan." Sir Richard Branson, Founder and Chairman of the Virgin Group of companies, including the "UK('s) arguably . . . most relevant radio brand and one of the largest national commercial radio stations in the UK," is "thrilled to be joined by Bob Theleen and his team from ChinaVest. Their 16 years of investing in Greater China and relationships will certainly help us in our understanding of the needs of these exciting markets."

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5. ChinaVest emphasizes Chinese logistics at Global Private Equity Conference

International Finance Corporation's Global Private Equity Conference

09-11 May 01

In a presentation to the IFC Global Private Equity Conference last May, Mr. Robert Theleen, Chairman of ChinaVest, laid out ChinaVest's positioning in a segment titled "Emerging Industries: Coming soon to a market near you?" After reviewing China's economic trends, including a 9.3% real annual growth rate and a quadrupling of per-capita income since 1978, Mr. Theleen spotlighted seven industries driving China's growth: automotive, pharmaceuticals, cosmetics, textiles, telecom, technology, and


consumer goods. The historical logistical challenges of investing in China were addressed, as were signs of China's improvements. ChinaVest's strategy for capitalizing on China's opportunities is to build a brand name "as the leading fully integrated logistics investor." They plan to "build a professional logistics team combining local talents with western supply chain management methods." And "build a nationwide service network with fully integrated information system."

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4. ChinaVest profiled by CyberLabs Research

CyberLabs Research

In a profile piece, CyberLabs Research overviews ChinaVest's strategy of investing in "growing companies doing business in or with China, Hong Kong, and Taiwan." ChinaVest has


invested in a range of companies, believing that its "collective business and financial experience in Asia and the United States gives (the firm's) portfolio companies an operational advantage in the market."

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3. ChinaVest Pioneers Greater China; by Shu-Ching Jean Chen

12 Apr 01

Quoting ChinaVest Fund managers, Shu-Ching Jean Chen writes that ChinaVest is "the first independent venture capital fund operating in China that is not affiliated with a bank, the first buyout firm in the greater China region and the first private equity investor in China. It is also one of the very few venture capitalists that focus on investing in China-related ventures." The firm's first Chinese venture in 1986 was also "the first foreign transport joint venture ever struck in China." ChinaVest sold its investment in Santa Fe International two years later to reap "an internal rate of return of 142%." The company has since invested in a number of "transportation-related investments in China, including warehousing company CV Transportation Services, household goods and freight forwarding company Global Transport and consumer goods distributor Tait Asia."

Since 1985, ChinaVest has closed five funds "worth more than $300 million and invested in more than 40 companies." Shu-Ching Jean Chen chronicles the firm's evolution from the early 1980s when Robert A. Theleen and Patrick L. Keen, colleagues at First National Bank of Dallas, formed Dallas Pacific Group. In 1984, they recruited Dennis Smith and changed the name to ChinaVest. The partnership expanded in the 1990s to include Alexander M.K. Ngan, founder of Zindart Ltd. which ChinaVest took public on the Nasdaq in 1997; Michael Bownrigg, the former U.S. trade representative to Hong Kong; Monique Lau, "a corporate credit


banker with Citibank and Bankers Trust; Jenny Hsui, a seasoned China trader; and Edward B. Collins, formerly a partner and greater China legal adviser with law firm McCutchen, Doyle, Brown & Enersen llp."

According to Lau, ChinaVest's success has been keyed to singling "out up-and-coming Chinese entrepreneurs." For example, Asia Info Holdings was founded by young Chinese students in the U.S. and debuted on the Nasdaq in March 2000. It has "captured 70% of the Chinese Internet infrastructure market." Lau goes on to describe "two patterns of investment that ChinaVest has long orchestrated." One "involves assuming a controlling stake, and jump-starting a restructuring process." And the other "is to invest in growth companies in an early stage." In the latter, ChinaVest avoids a controlling stake so as to preserve "the incentives of the founding entrepreneurs."

ChinaVest has staked out positions "from light manufacturing to information technology to consumer goods." A notable investment includes "Shenzhen-listed Luks Industrial, a television manufacturer" from which ChinaVest was able to achieve "an internal rate of return of 34% five years later after Luks went public in Hong Kong." ChinaVest seeks two exit strategies, a conventional public offering or a trade sale by which they sell out to an interested buyer. While not without setbacks, notably a total loss of its investment in Hong Kong's largest video store chain, Lau states, "If you look around VC industry, and look at us, it's an incredible record."

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2. High Technology Development Fourth Wave of Foreign Investment in China

IDG News Service; Hong Kong Bureau

08 Dec 99

In furthering a trend that Robert Theleen, co-founder and chairman of ChinaVest, a U.S. venture capital firm, describes as "the latest of four major waves of foreign business in China since 1979," Motorola has announced that it will work in conjunction with China's Research Institute of Telecommunications Transmission


in an effort to "better understand what the Chinese market demands from 3G wireless networks and devices." Commenting to attendees at a seminar organized by the California-Southeast Asia Business Council, Mr. Theleen points out that, "A growing pool of world-class technical talent now exists in China's universities and research institutes."

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1. ChinaVest Taps Entrepreneurs To Capitalize On Greater China

Forbes; by Andrew Tanzer

03 Aug 92

In an article titled "Greater China, greater profits," Andrew Tanzer turns the spotlight on Robert Theleen, Chairman and cofounder of ChinaVest. ChinaVest has achieved "compound annual returns of 30%, 28%, and 26% on (its) three investment pools" by "investing with entrepreneurs in Greater China . . . 120 million Chinese encompassing Taiwan, Hong Kong and China's two southern provinces of Guangdong and Fujian." The economy of the southern area of Guangdong province, known as the Pearl River Delta, "is expanding by 20% a year; personal incomes in that region of 20 million people have swelled an astonishing tenfold since the late 1970s."

Drawing on his experience in military intelligence during the Vietnam War and later as a banker in Singapore and Hong Kong, Robert Theleen avoided the mistake of focusing on Beijing that large American firms made when they rushed into the Chinese market in the early 1980s. He, instead, invested with "Hong Kong Chinese businessmen who were being pinched by rising


costs in Hong Kong and who looked for cheaper labor just across the border, in Guangdong."

His first fund established in 1985 focused mainly on "Hong Kong companies moving production of goods such as TV sets, videocassettes and electronic components to China." A second fund was launched in late 1987. Robert Theleen and ChinaVest sought to capitalize on an expected increase in Taiwanese spending due to Taiwan's increasing wealth and declining import barriers. The firm's third fund was launched in mid 1989. Here, ChinaVest focused on Taiwanese entrepreneurs investing in mainland China and U.S.-based Chinese entrepreneurs. Mr. Theleen has begun to steer ChinaVest's third fund "to southern China's consumer goods sector."

Mr. Tanzer describes ChinaVest's strategy as investing in "middle-stage venture capitalists, typically selecting already profitable companies with sales of $10 million to $50 million as targets. The investment often takes the form of debt carrying a below-prime coupon and convertible into 10% to 40% of a company's common shares."

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DISCLOSURE: Corporate Diaries are compiled and published by William Dunk Partners, Inc., P.O. Box 3687, Chapel Hill, North Carolina, 27515. All information is taken from publicly available sources that are believed to be reliable, and every effort is made to assure accuracy. Nevertheless, no guarantee or assurance of accuracy can be provided. No offer on our part with respect to the sale or purchase of any securities is intended or implied, and nothing herein is to be construed as a recommendation to buy or sell any securities. Corporate Diaries are independently produced and maintained.

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