China tech veterans to start “domestic replacement” fund to help firms banned by US

REUTERS/Kevin Lamarque

Chinese tech veterans, including former executives at Huawei and SMIC, are planning to launch a “domestic replacement” fund by the end of the year to help create China‘s next tech giant and support Chinese companies sanctioned by Washington.

Venture capital firm China Europe Capital aims to raise 5 billion yuan ($731.46 million) for the fund which will invest in startups specialising in technologies including semiconductor, 5G, and artificial intelligence, said Zhang Jun, the firm’s chairman and a former vice president at telecom equipment maker Huawei.

The fund launch comes amid a government-backed investment boom in China‘s technology sector as Beijing competes with Washington in an increasingly acrimonious “tech war”.

Relations between the world’s two largest economies have nosedived in recent months as they butt heads over the coronavirus pandemic, Hong Kong, and trade.

China and the US are in a Great Power rivalry that will end only when there’s a knockout,” Zhang told Reuters in an interview. “It’s not just about trade war, or sanctions. It’s a matter of life and death.”

Huawei, drone producer DJI and video surveillance company Hikvision are among a growing list of Chinese companies sanctioned by US President Donald Trump’s administration.

On Friday, Reuters reported that Washington might blacklist China‘s biggest chipmaker SMIC, or Semiconductor Manufacturing International Corp.

Zhang sees opportunities in the current crisis, betting the Sino-US decoupling will foster a self-sufficient home-grown tech sector that can one day live without incumbent US champions such as Qualcomm and Intel.

There is scepticism among analysts, however, over how successful China can be should it get cut off from Western supply chains given it still has a long way to go to become self-sufficient in technology.

“More and more Chinese companies are being sanctioned by the US, and what we do, is to provide them with spare tyres … so that those cut off from US supplies can survive, and run, although with a limp,” said Zhang, who also sits on a panel of experts at China‘s Ministry of Industry and Information Technology.

The new fund also aims to foster Chinese tech champions, capitalising on the expertise of a management team that also includes Joseph Xie, a founding member of SMIC, and Li Zhengyu, a former executive at Foxconn, Zhang said.

“We hope to find the next Huawei, the next DJI, or the next BYD,” he said, referring to electric car maker BYD Co Ltd.

China Europe Capital is backed by investment groups including New Margin Capital, CSC Group and Cybernaut, and aims to launch the “domestic replacement” fund in partnership with local governments.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.