Dot.com Bust Redux? China Style?
Very good, very interesting, article in today's Washington Post by Ariana Eunjung Cha, entitled, "Tech Boom Sweeps China, But Some Sense a Bubble." General thesis is that there are plenty of good places in China for venture capital (VC) funds to put their money, but valuations are sky high right now:
Some fund managers are wary of what lies ahead in the short term, however, and worry that China is creating a tech bubble similar to the one that burst in the United States at the start of the decade. But venture capitalists, entrepreneurs and competitors point out that Silicon Valley remains a prominent tech center, despite the bust. They say the tech sector in China, which has an estimated 162 million Internet users, will be a force to be reckoned with.
I think all of this is true.
Comments (1)
Read through and enter the discussion by using the form at the endPaul Denlinger - January 1, 2008 8:29 AM
Money, especially VC and PE money goes to where it thinks it will find the best ROI. Part of this has nothing to do with China; it has to do with the continuing fall of the US dollar in which most funds are denominated. There is a rush to get out of US dollars and into yuan, which is now seen as a stronger currency than the US dollar.
Excess money-flow into the Chinese yuan will naturally mean a larger proportion of lower-quality investments going into China.