Liu Jianjun: The venture capital industry is developing rapidly, but there are still double deficiencies

The 2013 "Venture Capital: Building a New Engine of China's Innovative Economy Summit Forum" was held on November 18. Liu Jianjun, head of the Private Equity Fund Working Group of the Fund Supervision Department of the China Securities Regulatory Commission, delivered a speech. The venture capital industry is developing rapidly, but there are still two deficiencies, one is that the policy support is not enough, and the other is that the supervision needs to be improved.

The following is the full text:

Respected Vice Mayor Chen Yingchun, Respected Director Xiao Yafei, all venture capitalists, old and new friends, good morning! First of all, I am very grateful to Shenzhen for inviting me to participate in this forum again. In October last year, the leaders of the China Securities Regulatory Commission proposed to me that I could work in the China Securities Regulatory Commission. After August's hard work, the National Development and Reform Commission finally agreed to my transfer to the China Securities Regulatory Commission in May this year. Since October last year, for more than a year, many friends have paid attention to my whereabouts, and even some media have made some reports, although some media reports have certain elements of speculation. As Mayor Chen said, our Shenzhen venture capital is the leader of the country's venture capital. This is not only because the venture capital institutions have played a leading role, there is a very important aspect, that is, our Shenzhen Venture Capital Forum is in the whole of China. It has played a role as a wind vane in the venture capital forum.

The Shenzhen Venture Capital Forum has been held for more than 10 sessions, and each session has been able to keep pace with the times and discuss key issues of concern to the venture capital community. This session of the Venture Capital Forum was held under a special historical background. First of all, it was held at a period when the development of China's venture capital entered a critical turning point, and at the same time, it was also held at a period when the policy and regulation system of China's venture capital supervision system was in transition. Originally, in the past year or so, I have never participated in public forums or given public speeches due to the sensitivity of Shenzhen. This time, under the entrustment of Chairman Yao, Chairman Zhuang and Director Wang of the Fund Department, I finally have a point. The courage to stand on the open forum to meet you, and also talk about my own understanding. What is good to say? China's current venture capital system is indeed in the most critical period. The venture capital system includes all aspects of policies, laws and related institutional systems. The content is a systematic project and is very complex. I think I will talk to you about my understanding of each component. You may not remember it, so I simply rationalized it. Among all the systems and mechanisms, in fact, the venture capital system can be divided into two parts, one It is the policy and legal system, and the other is the supervision system. These two systems are driven by two wheels, and our venture capital system can truly be established. Although our China's venture capital system has already taken shape, but if it needs to be further improved, then I Personally, I think a two-wheel drive strategy should also be adopted in these two aspects. So in my speech today, I will talk about the two-wheel drive strategy that promotes the improvement of the venture capital system.

First of all, I would like to review with you the achievements we have made in the construction of the venture capital system in the past. Second, I would like to deeply reflect on the double insufficiency of venture capital in our country. To improve China's venture capital system, we must focus on improving the effect of policy support and the effect of legal supervision. Only by improving these two efficiencies can two-wheel drive become a reality. First of all, let me review the basic procedures for the construction of our venture capital system. Since the concept of venture capital was proposed in 1985 in several decisions of the Central Committee of the Communist Party of China on the reform of the scientific and technological system, we have begun to explore venture capital, especially in 1996. The Disciplinary Inspection Commission, the former State Science and Technology Commission and the China Securities Regulatory Commission and other relevant departments have begun systematic exploration to develop venture capital funds. In 2005, they finally issued the interim measures for venture capital enterprises in the form of joint regulations of ten ministries and commissions. This is our past venture capital. The basic law of investment funds is the same as the departmental regulations. The release of this departmental regulation marks that China's venture capital has entered the development track of the rule of law. Subsequently, related supporting policies such as the tax support policy for venture capital and the venture capital guidance fund policy were successively introduced, and the Growth Enterprise Market, an important exit channel for venture capital, was finally launched. my country's venture capital industry has shown a good momentum of rapid development. As of the end of the second quarter of 2013, the number of venture capital enterprises under management nationwide has reached 1,566, and there are still many enterprises that are not included in the venture capital system. They have made significant contributions in increasing jobs and improving corporate R&D capabilities, promoting long-term industrialization of products, boosting economic growth and raising taxes. Especially in Shenzhen, as a hot spot for China's venture capital industry, with the strong support of relevant departments in Shenzhen and the Shenzhen Venture Capital Association, there have emerged Shenzhen Venture Capital, Dacheng Venture Capital, Shenzhen-Hong Kong Industry-University-Research, Dongfang Fuhai, China Merchants Technology With the strong support of various venture capital institutions, a large number of innovative enterprises such as Alibaba, Baidu, Sina, ZTE, Mindray, BYD, BGI, etc. Develop and grow, and become a leading enterprise in the sub-industry. While seeing the achievements of the venture capital system, we must also recognize our problems. I think we still have double deficiencies. If we measure it by the standard of two-wheel drive just now, he actually has double deficiencies. Why do you say that? First of all, from the perspective of national and social and economic development requirements, my country is currently in a critical period of accelerating the transformation of the economic development mode. The announcement of the just-concluded Third Plenary Session of the 18th National Congress of the Communist Party of China also emphasized again, including the decision issued the day before yesterday. To transform the mode of economic development and accelerate the construction of an innovative country, to truly transform the mode of economic development, we must vigorously promote the optimization and upgrading of the industrial structure, accelerate the cultivation of strategic emerging industries, and promote the implementation of the strategy of driving employment through entrepreneurship. Under this background , Venture capital, as an important capital force to support entrepreneurship and innovation, should and can make more positive contributions to promoting scientific and technological progress and thereby promoting the optimization and upgrading of industrial structure and realizing innovation-driven by promoting the transformation of scientific and technological achievements. However, it is precisely because of the double deficiencies in the venture capital system that restrict the development of venture capital. What about the double deficiencies? In terms of policy support system, firstly, although the national finance and taxation department issued a preferential policy for venture capital as early as 2007, under the background at that time, the finance and taxation department only applied this policy to corporate venture capital funds. Income tax also expressly states that partnerships do not apply. Then, since the corporate venture capital fund must first bear double taxation in the two links of fund and investment, the effect of preferential tax policy is greatly reduced. The previous tax policy was studied in 2006 and released in 2007. Later, In 2008, the relevant departments significantly raised the standards of high-tech enterprises, which further reduced the preferential tax policies. Although the National Development and Reform Commission, the Ministry of Finance and the Ministry of Commerce jointly drafted the guiding opinions on promoting the establishment and operation of venture capital norms, this opinion is not taken seriously. Released in the name of the General Office of the State Council, but so far the national venture capital fund has not been formally established and operated. There are still many policy obstacles in the process of industrial and commercial registration and investment withdrawal. In terms of the legal supervision system, although ten ministries and commissions issued interim management measures for venture capital enterprises in 2005, and established a venture capital fund record management system with the principle of moderate supervision, I think moderate management I have always thought it was correct and sensible, but due to the constraints of the low level of departmental regulations and laws, the effectiveness of legal supervision is obviously insufficient, so this year, there have also been some illegal operations, and even more serious cases in some places. There are many reasons for the phenomenon of illegal fundraising, but the most important reason is that the legal supervision system is not effective enough, and there is no moderate and effective supervision. Since there is a double deficiency, what should we do? I think that in order to better play the role of venture capital knowledge innovation and promote the transformation of economic development mode, we must focus on improving the efficiency of the political support system and the legal supervision system. Only when two wheels are driven, our venture capital system It is possible to speed up the improvement.

I will discuss my personal views in two aspects. First, how to focus on improving the efficiency of the policy support system, then I have always believed that for venture capital, the emphasis is on encouragement and support. The second is the appropriate legal supervision. There is a lot of work that needs to be done in terms of the effectiveness of the policy support system. At least three aspects should be made great efforts. First, under the premise of unifying various investment funds and basic tax policies to avoid double taxation, the characteristics of venture capital funds should be considered. , improve the current preferential tax policies, so that venture capital funds that mainly support small and medium-sized enterprises can receive practical policy support. The second is to use the National Small and Medium Enterprise Development Fund, which has been approved by the State Council, to give full play to its function as a state-level venture capital fund, and guide more social capital to participate in the establishment of venture capital funds. The previous year, the State Council had approved the establishment of a small and medium-sized enterprise development fund of 15 billion yuan. Last year, this financial fund had already arrived in the account. During the research process, we felt that the 15 billion yuan fund was mainly used to support the establishment of social and non-governmental funds. In such a mechanism as a venture capital fund, due to the process of functional transformation, relevant departments have to study specific policies. I look forward to the release of the SME development fund and related institutional arrangements as soon as possible. The third is to remove obstacles related to policies and laws, and create a favorable environment for policies and laws. The fourth is to speed up the construction of a multi-level capital market system and improve the exit mechanism for venture capital, including accelerating the expansion of the national SME share transfer system across the country, allowing real growth opportunities across the country that have not yet reached the ChiNext Board The required companies are listed on the New Third Board. From the perspective of the legal supervision system, there are mainly three aspects to improve its efficiency. The first is to improve the legal level of venture capital fund management under the framework of implementing unified legislation on various private equity funds, and to realize the transformation of the legal supervision system of venture capital funds from the current moderate supervision to moderate and effective supervision as soon as possible. To clarify, I hope you don't understand. It seems that if you talk about improving the efficiency of legal supervision, you will kill the industry. The purpose is not like this, but it is for better and moderate supervision. Why? China's historical practice in the past often led to chaos when it was released, and stricter supervision after chaos. If we want to insist on moderate supervision for a long time, we need effective supervision support. Without major problems, this effective in-depth supervision can continue. Therefore, the improvement of this efficiency is to achieve appropriate supervision. Now we are also adapting to the requirements of the industry. We are formulating the conditions for unified supervision of private funds. Effectively improve, we can design the arrangement of the corresponding system. Including venture capital funds, if it involves illegal investment and other behaviors, we must strictly investigate and deal with it, but this investigation and punishment will not affect the post-event supervision, so we always insist on not engaging in the approval system, nor the approval system, and all kinds of fund management companies. It can be established independently. It only needs to be registered with the association of the China Securities Regulatory Commission after it is established. All kinds of funds can also be established independently. It is only necessary to go to the association of the China Securities Regulatory Commission to file for the record after the establishment. We just need to do an after-the-fact monitoring based on this kind of registration and filing information. If illegal fundraising is found, we will investigate and punish it, and form a back-pressure mechanism through such post-event investigation and punishment. It will not dare to raise funds illegally in the process of raising funds. In this regard, I respect the independent operation of the market. In order to truly grasp the illegal fund-raising and strengthen the coordination of the financial office system, Mr. Xiao also told me in the morning that we will supervise private equity funds in a unified manner in the future. There will be better results. The third is to speed up the improvement of the industry self-discipline mechanism for venture capital investment and promote the healthy and standardized development of the industry. I think that only by significantly improving the efficiency from these two aspects, can the system of venture capital be improved at a faster pace.

In June of this year, the Central Office of the Commission, drawing on international practice, adjusted the supervision functions of equity investment funds, including venture capital funds, to the China Securities Regulatory Commission. According to the notice of the division of labor, we are speeding up the research and drafting to uniformly adjust the management regulations of private securities funds and private equity investment funds including venture capital funds. At present, this regulation has been discussed and revised repeatedly, including listening to the opinions of our Shenzhen Association Mr. Wang and other experts, and has formed a draft, which was sent to 13 ministries and commissions for comments on November 5th. 15 Shenzhen venture capital institutions hold a closed-door seminar, then we can express our own opinions. I sincerely hope that everyone will put forward criticisms, so that our draft can be improved as soon as possible, so that we can report it to the State Council as soon as possible. I believe that with the straightening out of the venture capital supervision system, especially taking advantage of the Third Plenary Session of the 18th CPC Central Committee, and with the joint efforts of all sectors of society, my country's venture capital system will be able to improve the effectiveness of the policy support system and legal supervision at a faster pace. Both aspects of system performance have been significantly improved. The development of venture capital in China can reach a new level, and it can make new contributions in promoting the transformation of economic development mode and promoting the construction of an innovative country.