Chapter 383 IDG, with Tears in Its Eyes, Has an Appointment with ASML of the Netherlands
In the coffee bar in the lobby of Huating Hotel, a fat middle-aged man wearing glasses was drinking coffee elegantly.
Li Xiaofan recognized this elegant middle-aged man at a glance. He strode over and stretched out his hand:
"Hello, Mr. Xiong, I am Li Xiaofan!"
The middle-aged man Li Xiaofan greeted more than 20 years later was the famous global chairman of IDG Capital, Xiong Xiaoge.
Currently, Xiong Xiaoge is the person in charge of IDG in the Asia-Pacific region and China.
"Hi, Director Li, I've known you for a long time, but I didn't expect you to be so young!"
Xiong Xiaoge, born in 1956, is now 40 years old. Although he had seen some introductions about Li Xiaofan in online news before, he was still surprised to see Li Xiaofan face to face.
The well-known investor who invested in the Yahoo project in front of me is actually so young.
Today's meeting between the two was arranged by IDG Chairman McGovern, Xiong Xiaoge's boss in the United States, who wrote an email to Xiong Xiaoge and asked Xiong Xiaoge to take the initiative to contact Li Xiaofan.
McGovern told Xiong Xiaoge in an email that through the introduction of Mary Meeker of Morgan Stanley, the U.S. IDG headquarters invested in the Pacific Online Bookstore project founded by Li Xiaofan in Singapore, allowing Xiong Xiaoge, who is responsible for the Asia-Pacific business, to have Let’s follow up on Li Xiaofan, a rising investment star who has become very popular recently.
Xiong Xiaoge joined IDG in 1991 and returned to China to take charge of IDG's business in China. In the past few years, he adhered to IDG's tradition of operating information publishing industry and jointly jointly published more than a dozen professional newspapers and magazines in China. The famous "Computer World" weekly is a professional magazine jointly published by IDG in China.
The next year, Grandpa Deng went south and gave a speech, signaling that the pace of reform would be accelerated. Xiong Xiaoge, who had an insight into the development opportunities, decided to make venture capital, and later received the support of Chairman McGovern. However, due to the lack of a well-established domestic venture capital mechanism, their early investments did not go smoothly, and several investments such as laptop battery research and development were all in vain.
So when Chairman McGovern wrote an email to introduce Li Xiaofan, an angel investor in the Yahoo project and founder of the Singapore Pacific Online Bookstore project, to Xiong Xiaoge, Xiong Xiaoge now regarded Li Xiaofan as a god-like idol.
"Director Li, I'm glad that you took time out of your busy schedule to meet me!"
"Mr. Xiong, you're welcome, big brother. When I went to the United States last time, I had the honor to meet with Chairman McGovern of IDG. I heard from him that IDG has also set up venture funds in China. How are you doing with these funds? Is it going well?" Li Xiaofan asked.
"Director Li, to tell you the truth, my eyes are full of bitter tears!" Xiong Xiaoge said with emotion.
"Mr. Xiong, why do you say that?" Li Xiaofan asked curiously.
Xiong Xiaoge explained: “Before the establishment of our joint venture venture capital fund, there was only one government-run venture capital institution in China called China New Technology Venture Capital Company. This China New Technology Venture Capital Company was established by the National Science and Technology Commission, the Ministry of Finance and It was initiated by some central enterprises and other units with a scale of only 10 million US dollars. The original purpose of establishing this company was to cooperate with the implementation of the National Torch Plan. Therefore, no one in China had any experience in venture capital before and lacked relevant supporting laws and regulations. Let's cross the river by feeling for the stones..."
Xiong Xiaoge continued:
"Three years ago, IDG and the Shanghai Science and Technology Investment Company under the Shanghai Science and Technology Commission each invested US$10 million to establish Shanghai Pacific Technology Entrepreneurship Co., Ltd. Later, we established a joint venture with the Beijing Science and Technology Commission and the investment company under the Guangdong Science and Technology Commission. Beijing Pacific Technology Entrepreneurship Co., Ltd. and Guangzhou Pacific Technology Entrepreneurship Co., Ltd. According to the agreement, the three companies combined, we theoretically manage a fund of approximately US$60 million..."
Li Xiaofan praised: "$60 million, three venture capital funds that cooperate with the National University of Science and Technology's largest city science committee! Mr. Xiong, your work is very effective!"
However, Xiong Xiaoge smiled bitterly and said: "It sounds wonderful, but the reality is very ugly. At present, there are many legal obstacles to venture capital in China, which hampers our hands and feet, making our investment work seem to be unimagined. So smooth..."
"Mr. Xiong, can you give me a little introduction? What are the current obstacles?" Li Xiaofan asked curiously.
Xiong Xiaoge said cheerfully: "Okay, Director Li, let me give you a brief introduction. We currently face two main legal restrictions. The first is that due to the strict control of capital entering the mainland from abroad, we were not allowed to do so at that time. IDG has established a wholly-owned venture capital management company in the mainland, so we can only cooperate with the local science and technology commission to establish a joint venture venture capital institution. "
"Although the Ministry of Foreign Trade and Economic Cooperation promulgated the "Interim Provisions on Foreign Investment in Establishing Investment Companies" last year. However, this regulation has very high requirements for foreign investors setting up investment companies. For example, the assets of the foreign party must not be lower than At US$400 million, the registered capital of the investment company has been paid on schedule in accordance with the provisions of the contract and articles of association and has been The amount of capital paid is not less than 30 million U.S. dollars, or the foreign investor has invested in establishing or owning more than 10 foreign-invested enterprises in China. It can be seen from these details that this regulation is mainly for those investment entities. Manufacturing multinational companies, and foreign venture capital institutions like ours are definitely not qualified...
Xiong Xiaoge continued:
"Also, according to the Sino-Foreign Equity Joint Venture Law revised in 1990, foreign investors are not allowed to jointly establish joint ventures with domestic natural persons. This provision also causes great trouble for our investment. When we are optimistic about a project, we only It allows entrepreneurs to re-register a new company, and then let this new company establish a partnership with our joint venture venture capital company Moreover, the current foreign investment law and policies stipulate that only projects with foreign investment accounting for more than 25% can enjoy the preferential policy treatment of Sino-foreign joint ventures, which requires our joint venture venture capital investment to account for 50% of the shares in the new project. The above makes it difficult for entrepreneurs to accept the joint venture model and also creates great difficulties for the management of invested companies..."
The current legal restrictions that Xiong Xiaoge complains about lead IDG Capital to usually adopt the "joint venture model" in early investment projects, that is, a domestic venture capital institution jointly established by IDG Capital serves as the investment subject, and then jointly establishes a joint venture with a company registered by the entrepreneur. Form a new company.
Under this model, exit was also a big problem. Later, IDG did not make its first exit from the Chinese market until 2000, and it was not through listing, but through equity transfer.
Xiong Xiaoge said helplessly: "Director Li, to be honest, due to the various reasons mentioned just now, as well as the cultural differences between China and foreign countries, the investment performance of our joint venture fund is not very good. After liquidation, the average annual income may only be 10 %. So after the three-year contract period of our first joint venture fund is up, we plan to liquidate and dissolve..."
After being criticized like this by Xiong Xiaoge, Li Xiaofan began to feel grateful for his own model.
At present, the country implements strict control over the inflow of foreign capital, but the "Foreign Investment Industry Guidance Catalog" promulgated by the state encourages foreign investors to invest in real industries such as agriculture and advanced manufacturing.
Li Xiaofan had previously asked his old classmate Wu Xiuli to give him a copy of the current "Foreign Investment Industry Guidance Catalog".
After Li Xiaofan read the entire article, he found that in addition to primary agriculture and secondary manufacturing, there were only three pitiful items in the service industry catalog that encouraged foreign investment:
1.\nInternational economic, technological and environmental information consulting
2.\nPrecision instrument equipment maintenance and after-sales service
3.\nConstruction and business incubation of high-tech and new product development centers
Domestic and foreign trade, tourism, real estate and service industries are all restricted industries and no wholly foreign-owned enterprises are allowed.
"Director Li, I heard from Chairman McGovern that you are also planning to start investing in domestic projects recently. So how do you plan to solve the legal obstacles I just mentioned?" Xiong Xiaoge asked.
Li Xiaofan smiled and said: "My model may be different from your IDG. You bring in overseas capital first and then look for projects. I am just the opposite. I am optimistic about the project first and then bring in overseas capital. And I currently plan to invest. All of them are high-tech industry projects encouraged by the state, so there are no legal problems at all! This is the advantage of being a self-employed person like me, it is more flexible and can make decisions quickly..."
Xiong Xiaoge laughed after hearing this: "Haha, Director Li, don't be humble. A big boss like you who is worth more than 200 million U.S. dollars and whose project he created is about to be listed on Nasnak is called a self-employed businessman. How can we, the migrant workers, be so embarrassed!”
After chatting for a long time, Li Xiaofan stood up and said goodbye to Xiong Xiaoge:
"Mr. Xiong, I am very happy to have a pleasant conversation with you today, and I have learned a lot of new knowledge. Now that your IDG company has invested in my Pacific Online Bookstore project, our two companies have been closely connected. We will have more time in the future. Get in touch and ask if you have any questions!”
"Director Li, please don't be polite. Next time you have a good project, you can contact me directly!"
This time, such a good Pacific Online Bookstore project by Li Xiaofan was directly introduced to the IDG headquarters in the United States by Morgan Stanley, which made Xiong Xiaoge a little depressed.
In terms of division of labor, McGovern put him in charge of the entire IDG Asia Pacific business. But his focus has always been on mainland China, so this time he missed an Internet project that was about to be listed on NASDAQ, which made Xiong Xiaoge, who was eager to make a career in the Asia-Pacific region, somewhat regretful.
(This book was first published on the Chinese website of Qidian. I hope everyone will support genuine reading and give the author motivation!)
After leaving Huating Hotel, on the way back to the old bungalow, Li Xiaofan received an international long-distance call from Wang Danrong from Singapore.
"Director Li, I would like to report to you that I just received an email from ASML in the Netherlands. I would like to confirm whether our company will participate in the shareholders' meeting to be held next week in their company headquarters in Eindhoven, the Netherlands?"