Against the backdrop of a huge amount of domestic liquidity from both state-owned and non-state-owned enterprises, the launch of the long-awaited Growth Enterprise Market in Shenzhen at the end of 2009 and the continued growth of private equity investment activity in China, China is expected to witness an upsurge in private equity and venture capital activity. In addition to establishing domestic and foreign-invested venture capital investment enterprises (“VCIEs”) and venture capital management enterprises (“VCMEs”), fund sponsors may also form domestic and foreign-invested equity investment fund enterprises (“EIFEs”) and equity investment management enterprises (“EIMEs”) in several of China’s major cities, including Beijing,Shanghai, Shenzhen, Tianjin and Chongqing, pursuant to local rules and incentive policies for the formation of EIFEs and EIMEs. This Han Kun Private Equity Commentary discusses national and local rules regarding and incentives for the formation of VCIEs, VCMEs, EIFEs and EIMEs from a comparative perspective.
