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Identifying what rules to follow, understanding what they mean, knowing which agency is in charge of enforcement and how much information is necessary for compliance are all conundrums facing investors in China¡¯s private equity and venture capital industry.
Richard Li sheds some light

For a sector seen to have so much potential, the rules of the game are still frighteningly unclear in China¡¯s private equity (PE) and venture capital (VC) industry. To start with, the regulatory system is complex and ambiguous; even though amendments are going some way towards clarifying policy positions, the often multi-layered levels of authority involved in administration and enforcement make for uncertainty as to who¡¯s actually running the show.

China is perhaps one of the most important markets to watch for both PRC and foreign fund managers. But the regulatory system appears too complicated to fund managers, involving various authorities and procedures that may or may not be relevant in different situations.

A power struggle over regulatory power has not helped. The regulatory weight and division of labour of the National Development and Reform Commission (NDRC) and the China Securities Regulatory Commission (CSRC) has been unclear. But some attempts are being made to devise a clearer regulatory formula, with new announcements and measures issued to clarify the functions of the two authorities.