Workforce issues in nursing Research Paper Example | Topics and Well Written Essays - 500 words

Workforce issues in nursing - Research Paper Example Several workforce accounts have appeared in the last decade to describe the cause and influence of the general nursing scarcity on healthcare. The majority of these studies state that registered nurses consist of the prime healthcare profession, with two million positions (Sherman, 2006). A report documented by the Joint Commission on Accreditation of Healthcare Organizations states that, 126,000 vacancies in nursing are not filled in health care institutions (Sherman, 2006). This means that, an overall scale of 13% for the positions is not occupied (Sherman, 2006). The State University of New York reports that, shortages in nursing were quoted as an important point by 90% of the countries involved (Sherman, 2006). A small number of female nurses join the profession due to the availability of employment chances for women in male controlled fields. Few students registered into nursing options as there was a recognized staff shortage, and an aging labor force going for retirement or roles that are stressful (Hart, 2006). The NSSRN reports that, the normal period of the entire registered nurses population was anticipated at the age of 45 in 2000, which is the maximum age since the research was initiated (Buerhaus, Staiger, and Auerbach, 2000). Buerhaus, Staiger, and Auerbach (2000) continue to indicate that very few staff members were below 40 years of age. This explains why a huge percentage of persons have a negative attitude towards the nursing profession. The extent of work satisfaction differs on where nurses perform their duties. Nurses employed in hospitals experience poor job satisfaction. Imbalanced staffing, hefty jobs, overtime, and insufficient wages are quoted as principal contributors to shortage in nursing (Sherman, 2006). In the course of my profession, I have experienced a lot of nurses working overtime with patients. I have also experienced

Seven Virtues Essay Example for Free

Seven Virtues Essay As long as there has been recognized sin in recorded history, there has been the virtuous equivalent by which good people live their lives. Before Christianity, there were the Pagan virtues, and when Christianity came into dominance in Scandinavia, it adopted these virtues and added several spiritual virtues of its own. Each virtue can be seen as a reflection of societal thought. The virtues tell how the ideal person lives their life, and this idea of the virtuous person is often reflected in literature. In fact, ever since the philosophical writings of Aristotle and the Greeks, there have been tales of characters who embody these virtues. The protagonist of Authun and the Bear exemplifies these seven virtues, and this technique can be seen in modern literature as well, particularly in the 1986 novel, Forrest Gump, by Winston Broom. The virtuous character used must be first defined as morally pure. This chastity sets about them an aura of childhood innocence in many representations. The seven heavenly virtues were first displayed in their current form in the epic poem, Psychomachia, around year 400 (Prudentius). They were the counterparts to the well-known seven deadly sins and chastity is perhaps the broadest of them all. It stresses the importance of honesty and purity of the soul in all walks of life. This was meant to be portrayed to society through the story of Authun and the Bear, as Authun lives a completely pure life in terms of morality. He is open and honest with all those he encounters throughout the story, even those who might otherwise be his enemies. When facing the rival king of Denmark, he maintains that he means to give his bear to Denmark’s king (Jones). By expressing this virtue in a traditional tale which was most likely passed on for years before being written down, it appealed to many people on a very personal scale. Authun may not have always lived the pure life he does in the current form because the story was written down after the shift away from shamanistic principles, when Christianity stressed the virtues. Ever since Christianity took hold as the dominant religion in Western society, there have been tales focusing on characters who represent the virtuous life. Forrest Gump is a modern example that distinctly outlines the idea of a pure character. He only has one love, is open and honest in all his dealings, and carries about a childhood innocence throughout the text. The effect of tales such as Authun and the Bear and Forrest Gump has made an undeniable mark on society; it has led to the reverence of a chaste life in all aspects of the word. In order to live a life of purity, one must also live by the virtue of temperance. Authun shows balance in many aspects of his life. Although he leaves on a journey for himself, he ensures that his mother is provided for before doing so (Jones). In Scandinavia, this can be seen as a shift away from the gluttonous pillaging of the Vikings. It was meant to impress upon the citizens that a life lived by moderation can be just as successful and fulfilling as an immoral life of greed. The vices were being brought to the light and this continued with many pieces of literature exposing them. Georg Stiernhielm, in Hercules, condemns gluttony through his personification of the vice in Ruus . This trend is prevalent all the way through to the 20th Century where in Broom contrasts the virtues Forrest with the greed of others in Forrest Gump. Forrest finds balance in his life by not overindulging in any one activity, but living a life of variety and virtue. _____________________ A clear offspring of the temperate life, is the participation in charity. For a society where it was once thought that the rich had the right to supplement themselves and let the poor remain poor, this was a monumental shift in social thought. This principle is displayed by Authun in his gift of the bear to the king of a foreign land, but more important is the reaction of the king. Kind Svein returns Authuns gift with marvelous treasure which Authun humbly accepts. The king also finds Authun a poor and sick man, but scorns those who scoff at him saying, â€Å"He has provided better for his soul than any of you† (Jones). With this new idea of Christian charity impregnated in traditional folk tales, Scandinavian society was able to move in a direction where assistance of the less fortunate was commended. This attribute of Authun and the Bear was especially standout for a time when kings meant to project images of power and might. Snorri Sturluson did not include the tale of Authun in his original book of King’s sagas, possibly meaning that the tale was created years later to suit Christian ideals. Either way, charity has been impressed on world culture as a virtuous characteristic, and has been noticeably prevalent in literature. While the virtuous character must be concerned with providing for others, he or she must also have intrinsic motivation to accomplish the tasks at hand. This is where the person of virtue must come to embody diligence. This virtue is set to combat the vice of sloth, which can be devastating to a productive society. By showing the success and happiness of a zealous man in Authun, the impression is that one can reach similar achievements by applying this motivation to their own life. This idea has been around many years as a necessary trait of citizens. In Plato’s Republic, the citizens are raised to work diligently at their tasks so that the entire city can prosper. Christianity saw the rewards of this work ethic and therefore preached that the virtuous life requires it. Forrest Gump continues this trend into the 20th Century by following the successful life of a man who excels at all tasks because of his persistence. Intelligence is not stressed in the virtues and neither Authun nor Forrest shows any signs of great intellect. Christianity did not need its followers to become extremely educated, because that was not deemed important for an ideal society. John Ruskin, a writer and critic of art, architecture and society in the 19th Century said, â€Å"Nearly all the evils in the Church have arisen from bishops desiring power more than light. They want authority, not outlook. † By teaching people to be diligent and hardworking rather than speculative and questioning, the Church gained power and authority through citizens who did not question its corruption at the time. Authun and the Bear was written prior to the Modern Breakthrough, where writers began questioning authority and tradition.

Non-Religious Celebrations Of Easter Should Be Done Away With Essay

NON-RELIGOUS CELEBRATIONS OF EASTER SHOULD BE DONE AWAY WITH   Ã‚  Ã‚  Ã‚  Ã‚  Have you ever sat back and thought about the different traditions that we celebrate in America as well as all around the world? Some of these traditions may include holidays, sporting events, and weddings. We celebrate certain traditions for religious reasons, for memorial reasons, and just for the fact that what we are celebrating is a tradition, and we wish to keep it that way. But some of the traditions that date back thousands of years have been altered from their original meaning. Easter is a perfect example of one of the traditions that has been altered to better suit our modern times. Originally, Easter was the celebration of the ascension of Jesus’ soul from the cross, on which he died, into Heaven. Today we have celebrations during Easter that include such things as a life-sized bunny, hard-boiled eggs that are dyed various pastel colors, and baskets, all of which have no religious significance. I think that the non-religious celebrations of Easter should be done away with.   Ã‚  Ã‚  Ã‚  Ã‚  To begin with, the non-religious celebrations of Easter should be done away with because they serve no relevance toward the original purpose of the tradition. Dyed eggs, bunnies, baskets, and so on do not provide us with any reason to have a celebration. Today we celebrate Easter by saying that there is an Easter bunny that will bring boys and girls candy and gifts as long a... Non-Religious Celebrations Of Easter Should Be Done Away With Essay NON-RELIGOUS CELEBRATIONS OF EASTER SHOULD BE DONE AWAY WITH   Ã‚  Ã‚  Ã‚  Ã‚  Have you ever sat back and thought about the different traditions that we celebrate in America as well as all around the world? Some of these traditions may include holidays, sporting events, and weddings. We celebrate certain traditions for religious reasons, for memorial reasons, and just for the fact that what we are celebrating is a tradition, and we wish to keep it that way. But some of the traditions that date back thousands of years have been altered from their original meaning. Easter is a perfect example of one of the traditions that has been altered to better suit our modern times. Originally, Easter was the celebration of the ascension of Jesus’ soul from the cross, on which he died, into Heaven. Today we have celebrations during Easter that include such things as a life-sized bunny, hard-boiled eggs that are dyed various pastel colors, and baskets, all of which have no religious significance. I think that the non-religious celebrations of Easter should be done away with.   Ã‚  Ã‚  Ã‚  Ã‚  To begin with, the non-religious celebrations of Easter should be done away with because they serve no relevance toward the original purpose of the tradition. Dyed eggs, bunnies, baskets, and so on do not provide us with any reason to have a celebration. Today we celebrate Easter by saying that there is an Easter bunny that will bring boys and girls candy and gifts as long a...

Impact of Ww1 on Canada

World War One had an impact on Canada both over seas and on the Canadian home front. It helped Canada develop a sense of national identity by gaining international status overseas. It gave women more jobs than working at home and but during the war there was the Conscription Crisis. These points impacted Canada greatly during and after WWI. In 1914 when World War One started, Canada was a legislative union, but Britain still controlled the foreign policy of all its dominions. So when Britain declared war on Germany the whole British empire was involved including Canada.As the war ended Canada met in Paris for the â€Å"Paris Peace Conference†. The conference was a big step towards Canada's independence. The main reason was, Prime minister Borden demanded that Canada have its own seat in the conference. Although there was great debate, in the end Canada acquired the seat. Fr the first time ever Canada was recognized as independent internationally. Before the war a woman's main job was to stay at home and look after the children as well as cook and clean. It was a while different story during the war.A mere 2800 woman served in the army as nurses in oversea hospitals. Other woman worked in Canada on jobs which would usually be called a â€Å"mans job†. For example woman where working in industrial sites since most of the men had left to war and there needed to be someone to supply and build arms as well as general items. Woman also worked operating fishing boats and working on farms. With this new era of woman working the government took notice that the woman weren't as fragile as they once believed. Woman seemed to be able to do a mans job good if not better.Then in 1918 women were granted the right to vote in federal elections, with the exception of aboriginal and immigrant woman. When war ended women stayed in the job force and worked alongside men. The conscription Crisis was a big deal off-seas as well as in Canada. This is because in 1917 thou sands of Canadians were killed or injured making the need to supply more soldiers immediate. Borden had promised there would be no conscription but as the war proceeded it became apparent they would need more soldiers if they wanted to win the war.Borden introduced the â€Å"Military Service Act†, which stated everyone able and fit under the guidelines of the act would have to fight in the war. There was outrage but unless the person hid there was no way of escaping going to war. World War One did have an impact on Canada both over seas and on the Canadian home front. It affected the woman and the men. The aboriginals and the immigrants. Almost everyone was affected by World War One one way or another.

Operator In A Call Centre In India

Suppose you are working as an operator in a call centre in India and receiving calls from Americans and Londoners. How would you handle such calls? Ans: As an operator first thing which I would try and ask politely would be that what is the route cause of the problem of the customer and would try and give time for explaining or removing out the frustration after which the customer would then have patience in listening to what we would try and explain.As an operator I would rectify the problem by all the better means and try to explain the customer in a better way that he would get convinced completely with the solution which could rectify the same. I would also make sure that the customer has any doubts or clarifications regarding the same and reconfirm the same from the customer about the solution explained to him was clear. As an operator I would co-operate with the customer to completely resolve the problem which ultimately satisfy the customer.I would also thank the customer for having the patience and giving us an opportunity to troubleshooting the issue and getting it rectified. I don?t want to speak to you. Connect me to your boss in the US,† hissed the American on the phone. The young girl at a Bangalore call centre tried to be as polite as she could. At another call centre, another day, another young girl had a Londoner unleashing himself on her, â€Å"Young lady, do you know that because of you Indians we are losing jobs? † The outsourcing backlash is getting ugly.Handling irate callers is the new brief for the young men and women taking calls at these outsourced job centres. Supervisors tell them to be „cool?. Avinash Vashistha, managing partner of NEOIT, a leading US-based consultancy firm says, â€Å"Companies involved in outsourcing both in the US and India are already getting a lot of hate mail against outsourcing and it is hardly surprising that some people should behave like this on the telephone. † Vashistha says Indi an call centre?s should train their operators how to handle such calls. Indeed, the furor raised by the Western media over job losses because of outsourcing

Antibiotics - Discovery and Resistance

Antibiotics - Discovery and Resistance Antibiotics and antimicrobial agents are drugs or chemicals that are used to kill or hinder the growth of bacteria. Antibiotics specifically target bacteria for destruction while leaving other cells of the body unharmed. Under normal conditions, our immune system is capable of handling the germs that invade the body. Certain white blood cells known as lymphocytes protect the body against cancerous cells, pathogens (bacteria, viruses, parasites), and foreign matter. They produce antibodies which bind to a specific antigen (disease causing agent) and label the antigen for destruction by other white blood cells. When our immune system gets overwhelmed, antibiotics can be useful in assisting the bodys natural defenses in controlling bacterial infections. While antibiotics have proven to be powerful antibacterial agents, they are not effective against viruses. Viruses are not independent living organisms. They infect cells and rely on the hosts cellular machinery for viral replication. Antibiotics Discovery Penicillin was the first antibiotic to be discovered. Penicillin is derived from a substance produced from molds of the Penicillium fungi. Penicillin works by disrupting bacterial cell wall assembly processes and interfering with bacterial reproduction. Alexander Fleming discovered penicillin in 1928, but it wasnt until the 1940s that antibiotic use revolutionized medical care and substantially reduced death rates and illnesses from bacterial infections. Today, other penicillin-related antibiotics including ampicillin, amoxicillin,  methicillin, and flucloxacillin are used to treat a variety of infections. Antibiotic Resistance Antibiotic resistance is becoming more and more common. Due to the prevalent use of antibiotics, resistant strains of bacteria are becoming much more difficult to treat. Antibiotic resistance has been observed in bacteria such as E.coli and MRSA. These super bugs represent a threat to public health since they are resistant to most commonly used antibiotics. Health officials warn that antibiotics should not be used to treat common colds, most sore throats, or the flu because these infections are caused by viruses. When used unnecessarily, antibiotics can lead to the spread of resistant bacteria. Some strains of Staphylococcus aureus bacteria have become resistant to antibiotics. These common bacteria infect about 30 percent of all people. In some people, S. aureus is a part of the normal group of bacteria that inhabit the body and may be found in areas such as the skin and the nasal cavities. While some staph strains are harmless, others pose serious health problems including foodborne illness, skin infections, heart disease, and meningitis. S. aureus bacteria favor the iron which is contained within the oxygen-carrying protein hemoglobin found within red blood cells. S. aureus bacteria break open blood cells to obtain the iron within the cells. Changes within some strains of S. aureus have helped them to survive antibiotic treatments. Current antibiotics work by disrupting so-called cell viability processes. Disruption of cell membrane assembly processes or DNA translation are common modes of operation for current generation antibiotics. To combat this, S. aureus have devel oped a single gene mutation that alters the organisms cell wall. This enables them to prevent breaches of the cell wall by antibiotic substances. Other antibiotic resistant bacteria, such as Streptococcus pneumoniae, produce a protein called MurM. This protein counteracts the effects of antibiotics by helping to rebuild the bacterial cell wall. Fighting Antibiotic Resistance Scientists are taking various approaches to deal with the issue of antibiotic resistance. One method focuses on interrupting the cellular processes involved in the sharing of genes among bacteria such as Streptococcus pneumoniae. These bacteria share resistant genes among themselves and can even bind to DNA in their environment and transport the DNA across the bacterial cell membrane. The new DNA containing the resistant genes is then incorporated into the bacterial cells DNA. Using antibiotics to treat this type of infection can actually induce this transfer of genes. Researchers are focusing on ways to block certain bacterial proteins to prevent the transfer of genes between bacteria. Another approach to fighting antibiotic resistance actually focuses on keeping the bacteria alive. Instead of trying to kill the resistant bacteria, scientists are looking to disarm them and make them incapable of causing infection. The intent of this approach is to keep the bacteria alive, but harmle ss. It is thought that this will help prevent the development and spread of antibiotic resistant bacteria. As scientists better understand how bacteria gain resistance to antibiotics, improved methods for treating antibiotic resistance can be developed. Learn more about antibiotics and antibiotic resistance: Scientists Target Bacterial Transfer of Resistance GenesDisarming Disease-Causing BacteriaBacteria Discovery Could Lead to Antibiotics Alternatives Sources: Centers for Disease Control and Prevention. Get Smart: Know When Antibiotics Work. Updated 05/01/12. cdc.gov/getsmart/antibiotic-use/antibiotic-resistance-faqs.html

East Meets West

East Meets West This paper describes intriguing accounts of various encounters of people between the ninth and 17th century. Ibn Fadlan, an Arab Chronicler, gives an account of his encounter with the Rus (One of the Swedish tribes) in the ninth century. Fadlan experienced a different culture from his Arabic. He described it as an alien and backward culture. Referring to the Rus, he says, â€Å"They are the filthiest of God’s creatures†.[1]Advertising We will write a custom essay sample on East Meets West specifically for you for only $16.05 $11/page Learn More Xavier, a Jesuit missionary, gave a historic account of his first encounter with the Japanese people in the 15th century. He described the Japanese as the best people known among the heathens.[2] â€Å"Portuguese Views of Chinese†[3] is an account of the first impression the Portuguese had upon encountering the Chinese. Canton described the Chinese as foolish people without knowledge of war. He al so described, He also described the Portuguese plan to invade and conquer China through a military warfare[4]. â€Å"Commentary on Foreigners from Ming official† is a description of the opinions of the Chinese about foreigners. According to the commentary, the foreigners invaded China at first without much effect. They were friendly in their engagements. However, their settlement and participation in Chinese trade had become intolerable because of their infiltration of Chinese culture with their foreign cultures. The Ming official described a plan of evicting foreigners from the Kingdom of Ming in the commentary[5]. In general, East Meets West is a description of various encounters of people between ninth and 17th century. Each of the four encounters had a different reception by the involved parties. The Eastern and Western encounters formed a prelude to major trends in world history. Briefly, the four perspectives of encounters of different people in the past had similar rea ctions. St. Francis Xavier, a Jesuit missionary of the 15th century, landed in Japan in 1552 on a missionary journey to spread Christianity. The warm reception he was given by the Japanese made him describe them as â€Å"courteous people†.[6] He described the Japanese as the best and most friendly people in the heathen world[7]. He described them as slow to anger and violence, despite their high regard for arms. Xavier also described the Japanese as people who had high regard for their arms and intolerance of contemptuous words and insults. He envisioned an easy missionary work of converting Japanese people to Christianity because of their high literacy and willingness to listen to foreign ideas. Besides many praises, Xavier also described the Japanese people as sinners because of their tolerance of some social evils such as the generational class system.Advertising Looking for essay on history? Let's see if we can help you! Get your first paper with 15% OFF L earn More Fadlan described the Rus as a backward people with primitive cultural practices. He described the fondness and love of Rus men for women. He noted in his encounter that each man had several slave girls for his sexual gratification. This cultural orientation made Fadlan describe the Rus as filthy people with barbaric cultural practices. Backward funerary rituals and human sacrifice are among the cultural practices of the Rus people that Fadlan regarded as barbaric. These cultural practices are different from the Islamic practices known to Fadlan. He saw several men line up to have sex with one slave girl in a funeral ceremony[8]. Fadlan found this an awkward and filthy practice. Fadlan encountered the Rus on an emissary journey to the King of Bulgars of Middle Voga in 921 A.D. He was in service of the Caliph of Baghdad. The encounter can be described as positive because of the warm reception he was given by his horsts in their territory and guidance to understand th eir culture. The Portuguese people encountered the Chinese in the 13th century as trading partners. Although, their first voyages were navigational and missionary ventures for exploring new lands and spreading Christianity, the Portuguese also explored mineral resources that interested their country. The Portuguese exchanged silver with Chinese ceramics, silk, and cotton[9]. The Chinese people accorded the Portuguese visitors a warm reception and accommodation without resistance. The Portuguese took courtesy of their horsts for foolishness and cowardice. In a letter written by Canton in 1517, the writer described the Chinese as foolish and cowardly people who had never fought in a war. Canton also described them as people with high regard for themselves. He said that the Chinese people referred to foreigners as savages and their country as the kingdom of God[10]. Despite the warm reception towards the Portuguese, Canton described in the letter the ill motives of Portugal to attack a nd conquer this new foreign land. The Portuguese wanted to control Chinese trade and gain profit from the immense resources of China. They successfully besieged and took control of all trade routes in the Indian Ocean in the 15th and 16th centuries. They introduced the pass system, otherwise called the Cartaz, which required all merchants in the trade network to pay a fee to them. The commentary on foreigners from a Ming official was a negative reaction the Chinese people developed against foreigners. The Portuguese and Spaniards entered China as trade partners. However, their settlement in the Asian country caused inconveniences to the Chinese. The Portuguese infiltrated Chinese culture with western lifestyle, which the Chinese people considered backward. In this commentary, the Chinese people wished for the quick exit of all foreigners from their land[11]. This perspective differs from the first view the Portuguese had about the Chinese. The Portuguese viewed Chinese foolish and c owardly people in a rich territory for them to conquer. In the second perspective, the Chinese people discovered the ill motives of their visitors and wanted to terminate their relationship with them.Advertising We will write a custom essay sample on East Meets West specifically for you for only $16.05 $11/page Learn More In conclusion, the above description of the four perspectives showed that various people in the past reacted differently to encounters with others. Fadlan’s encounter with the Rus people was intriguing. He encountered a sharp clash of cultures and religious practices. Fadlan encountered funerary rituals that were unheard off in Baghdad. Xavier’s encounter with the Japanese people was awe striking. Xavier described the Japanese as the best people among the heathens. The Portuguese encounter with the Chinese people was very positive during the first time. However, with time, the Chinese developed hatred for foreigners because o f the clash between western culture and local Chinese culture. Bibliography Montgomery, James E. Ibn Fadlan and the Rusiyyah. Journal of Arabic and IslamicStudies 3, (2000):n.p. Print Tignor, Robert. Contact Comerce, and Colonization. 1450s-1600. In Worlds Together, Worlds Apart: A History of the Modern World from the Mongol Empire to the Present, by Robert Tignor, 511-550. New York : Norton Company, 2011. Print. Xavier, St. Francis. A Jesuit Missionary Gives His First Impression of Japan. (1549): .10-13. Print. Footnotes Montgomery, James. Ibn Fadlan and the Rusiyyah. Journal of Arabic and IslamicStudies vol. 3, 2000, par 8 Xavier, Francis. A Jesuit Missionary Gives His First Impression of Japan. (1549):10-13. Tignor, Robert. Contact Comerce, and Colonization. 1450s-1600. In Worlds Together, Worlds Apart: A History of the Modern World from the Mongol Empire to the Present, by Tignor Robert, 511-520. (New York,Norton Company, 2011), 545 Ibid., 519. Ibid., p.546 Xavier, p. 10, par 2 Ibid., 9, par 2 Montgomery, par 7 Tignor, p.519 Tignor, p. 520. Ibid., 546

How to Say Goodbye in Chinese

How to Say Goodbye in Chinese Learn how to politely end a conversation in Chinese by knowing the different ways to say goodbye. The most common way to say bye is å† Ã¨ ¦â€¹, written in the traditional form, or å† Ã¨ § , written in simplified form. The pinyin pronunciation is zi jin.   Pronunciation In a previous  lesson,  we learned about  Mandarin Chinese tones.  Remember to always  learn new vocabulary  with its proper tones. Lets practice by saying goodbye in Mandarin Chinese. Audio links are marked with ââ€" º. Each of the two characters of å† Ã¨ ¦â€¹ / å† Ã¨ §  (zi jin) are pronounced in the fourth (falling) tone. Listen to the sound file and try to repeat the tones exactly as you hear them. ââ€" ºÃ‚   Character Explanation å† Ã¨ ¦â€¹ / å† Ã¨ §  (zi jin) is composed of two characters. It is possible to examine the meaning of each individual character, but it is important to remember that å† Ã¨ ¦â€¹ / å† Ã¨ §  (zi jin) is used together to form a complete phrase. Chinese characters have individual meanings, but the majority of Mandarin vocabulary is made of compounds of two or more characters. For interests sake, here are the translations of the two characters å†  and è ¦â€¹ / è § . å†  (zi):  again; once more; next in sequence; another è ¦â€¹ / è §  (jin): to see; to meet; to appear (to be something); to interview So a possible translation of å† Ã¨ ¦â€¹ / å† Ã¨ §  (zi jin) is again to meet. But, again, dont think of å† Ã¨ ¦â€¹ / å† Ã¨ §  (zi jin) as two words- it is one phrase that means goodbye. Other Ways To Say Goodbye Here are some other common ways to say goodbye. Listen to the sound files and try to reproduce the tones as closely as possible. ââ€" ºmà ­ng tiÄ n jin: 明å ¤ ©Ã¨ ¦â€¹ / 明å ¤ ©Ã¨ § : see you tomorrowââ€" ºyÄ « huÄ ­r jin: ä ¸â‚¬Ã¦Å"Æ'å…’è ¦â€¹ / ä ¸â‚¬Ã¤ ¼Å¡Ã¥â€ž ¿Ã¨ § : see you later (the same day)ââ€" ºhuà ­ tà ³u jin: 回é   ­Ã¨ ¦â€¹/回å ¤ ´Ã¨ § : see you later (the same day)

Assignment Project Management and Quiz Essay Example | Topics and Well Written Essays - 1000 words

Assignment Project Management and Quiz - Essay Example For each PERT action, estimates are amalgamated thrice in order to settle on the potential activity completion period. On the other hand, in the case of CPM it is supposition is that the times are identified by assurance. The development of PERT took place in the period of 1958 when the Special Projects Office belonging to the U.S. Navy first founded the Program Evaluation and Review Technique (PERT) in order to prepare and manage the program of Polaris missile. Even today, PERT is used to supervise unlimited schedules of different government agreements. In 1957, about the same period as PERT, J. E.Kelly from Remington Rand as well as M. R.Walker belonging to du Pont worked out the critical path method (CPM). Initially, at du Pont CPM assisted in the construction and preservation of chemical plants. Among all the procedures of CPM and PERT six of them are similar in both cases. Initially, this includes portraying the project as well as all its momentous tasks or actions. Secondly, bu ilding up the connections among the activities and selecting which of the actions would head others. Thirdly, it involves mapping out the network linking the entire list of activities. Fourthly, it comprises of allocating time and the estimations of costs to individual activities. Next, it consists of calculating the most extensive time path via the network. Lastly, it contains the utilization of the network to assist in preparing, arranging, supervising and administrating the project. Both of these techniques are very advantageous. They formally recognize the duties and tasks which must be finalized on time in order to ensure that the entire project finishes on time. Moreover, it also works out which jobs and duties can be delayed for a period of time if there is a need for the reallocation of resources to get hold of the missed jobs. Conversely, the connection between tasks and time is not immediately clear. This makes it difficult for others to understand them who are not familia r with these techniques. Example of St. Paul Hospital In order to complete the project of the construction of St. Paul hospital, PERT and CPM techniques were used. Primarily, it was decided to select the medical and administrative staff for the hospital. Secondly, the site where the hospital would be located was chosen followed by extensive site survey in order to determine whether the site was suitable or not for the construction to begin. Subsequently, the selection of all the essential equipments was made which will be required to carry out the tasks in the hospital. Next, the final and conclusive construction proposals and designs were prepared. Followed by this, the utilities were to be brought to the site in order to begin the procedure of establishing the hospital. Later on the process of recruitment and selection of the hospital staff was to be carried out. This included sending out application forms along with the specified designation which was required. When the applicant s applied, interviews were to be held and positions were to be filled of the hospital staff. After that all the selected vital equipments were to be purchased and delivered to the site. Eventually, the construction of the hospital was to begin and ultimately completed. Work Cited Render.B, Stair.M.S, Hanna.M.E. Quantitative Analysis for Management. 10th Ed. NY: McGraw-Hill Publishing Company Limited,

Burberry Essay Example | Topics and Well Written Essays - 1250 words

Burberry - Essay Example It also has a prominent base of goods made of leather and beauty products in the world. Burberry has a well diversified business model through which it sells apparel, accessories. It has well spread network of Retail, wholesale and licensing and it operates mainly in Asia Pacific, USA and European region but also has stores in rest of the world. In case of product diversification it has a rich source of women, men and children’s apparel and accessories and beauty products. The group operates into different functional areas like designing and marketing of its apparel, store architecture, supply chain management, IT, HR, Corporate affairs and strategy and finance section. For the financial year 2012-2013 its retail sales have earned 71% of total revenue and wholesale has earned 24%. Burberry has made a transition in its make-up and fragrance business by transferring it into direct operating structure. Burberry.com an online store of the group delivers it services to more than 10 0 countries in the world and further expansion of 84 more retail stores. Burberry is the most preferred luxury brand with more than 15 million fans on Facebook. It is also expanding its business in Middle East countries and has been listed as Top 100 Global Brands for consecutive four years by Interbrand (Burberry, 2013, pp. 17-26). Question 2. According to the auditor’s report of Burberry PLC, it was prepared by following the rules of IFRSs as adopted by EU. The report includes opinions which were prepared for the members of the company as per Companies act 2006. Auditors have analyzed all financial and non financial information of the company to identify whether it has any material misstatements with audited financial statements. Auditor’s report has given some opinion about the group’s financial statement that it has got a true view of the group’s profit and cash flows for the financial year 2013 and it was prepared as per the requirements of Companies Act 2006. Auditor’s report also has some matters like it has identified that director’s remuneration in some cases was not abide by law and auditors didn’t receive all the information they required for audit. Auditors need to review the director’s statement and the corporate governance statement which relates to the company’s agreement with nine provisions in UK. Auditor’s report has some advantages related to financial information like it provides the true view of the company’s financial statements. It also identifies the material misstatements or frauds in the financial statements prepared by the company. It also indicates the areas on which the company can improve it and evaluates the strength and weaknesses of the company. It analyzes the firm’s financial data and helps the investors by giving them the clear picture about the financial position of the company. Question 3. Profitability 2013 2012 % change ROE 0.24 0.30 -0.1 8 Gross Profit Margin 0.72 0.70 0.03 Net Profit Margin 0.13 0.14 -0.10 Profitability Ratio:- Profitability Ratio can be defined as financial a tool which is used to justify a company’s ability to generate revenue which is compared to the business’s expenses and other operational costs which are incurred during a specific time period and are compared to the same ratio of previous period. If the ratios are higher then it indicates that the company is doing well (Thukaram, 2007, p.99). From the above table we can see that Return on Equity for

Personal letter of reference for scholarship Essay

Personal letter of reference for scholarship - Essay Example One of Sahar’s strengths is her dedication to education and lifelong learning which she models by her constant attention to research, analysis and literacy. Her many achievements include qualifying as the youngest Ontario certified fitness instructor in 1998, a Nationally certified gymnastics and trampoline coach, and an Ontario certified teacher with a Masters in the philosophy of education. She pursued these qualifications with her goal in mind to be an advocate for education as a solution to global problems and problems with humanity. Consequently Sahar’s aims fit perfectly with the Cambridge mission to contribute to society through education. She embarked on her path to give back to society very early in life when at the age of 19 she began attending the University of Toronto both as a student and as a teacher of fitness classes there. Sahar is an incredibly well-rounded individual who does not limit herself in the areas of her pursuits. She displays expertise in poetry, athleticism, art, and mathematics. She is a very creative, emotionally intelligent, physically fit, and logically astute individual. She has won the Sir John A MacDonald Fitness Award, the Environmental Art Award, and volunteers for Amnesty International to promote human rights and political activism. Maintaining a healthy lifestyle became one of her practices that students aspire to. In addition, she was a very vocal and recognized feminist, trying to bring awareness and understanding to this often misunderstood term. Her varied, eclectic, and unique passions and perspectives bring new insight to any educational discussion she engages in. Sahar’s passion and creativity are not confined to the cognitive aspects of education. She also contributes to the social aspects of any environment she works in. While working at A.Y. Jackson, concerned by the fact that there wasn’t any celebration commemorating the Persian New Year, especially considering the huge Persian

Central Park Five and Scotts Brothers Article Example | Topics and Well Written Essays - 250 words

Central Park Five and Scotts Brothers - Article Example From this paper it is clear that the crime of rape/sexual assault in the context of these two cases is a race crime. It is imagined that since the Black and Latino  boys were around when the rape cases occurred, they are expected to have a link with the occurrence. Black and Latino  have long been linked to crime cases.This study outlines that  for Scottsboro Boys, the press mobilized the public to always consider the sentence on the boys a miscarriage of justice. The media always questioned the way in which the case was conducted. The same applied for The Central Park Five that had the press always insisting that the boys were innocent and the case was simply made-up. For the two cases, the fact that the reporter considers most contemptible is the reality that the youth of the boys in question was robbed. For The Central Park Five, he is shocked that the police ignored there existing no physical evidence. For Scottsboro Boys, I am surprised that only black boys were arrested.   Miscarriage of justice is evident in the two cases. As Burns et al indicate, it is true that Raymond, Kevin, Antron, Yusef and Kharey witnessed weird behaviors in the park. Forcing them to confess to the rape case is indeed illegal. The same applies to Scottsboro Boys who were falsely accused of the rape of two women in 1931 whilst on a train. The constitutional right to have proper evidence prior to sentencing was violated.

Crime Scene Investigator Essay Example | Topics and Well Written Essays - 1750 words

Crime Scene Investigator - Essay Example The ability to recognize and collect physical evidence properly is always invaluable in solving violent crimes as well as during prosecution. As a matter of fact, the role of a crime scene investigator is in most court cases very critical as he/she is the determining factor as to whether physical proof will be applied while prosecuting or solving violent criminal acts (Crime Scene Investigator Network, n.d). It is important to note that the investigation of a crime scene can either be straightforward or it can come with challenges, which would call for a multidisciplinary approach in order to resolve them. To start with, the investigator can get the wrong impression of the crime scene – for instance, a crime scene that seems to be accidental fire may have been staged to conceal further crimes. Therefore, hurried conclusions may make the investigator to miss out on important clues. The investigator should therefore know that every item that catches his/her attention is importan t and he/she should document it. He/she should thus be observant and diligent following standard procedures for every kind of scene response (Fish, Miller & Braswell, 2010). On arriving at the scene of crime, a crime scene-investigator must do various things and process lots of information. To start with, he/she should start by having a brief interview meeting with the first reporting officer on the scene as well as the lead detective in order to obtain information that can assist him/her comprehend what happened, when it occurred and the order of the events that took place (Domnauer, 2007). This should happen without the investigator getting too much information that is likely to taint his/her perspective. Instead, it should be sharpened in such a way that he/she is able to take the information that he/she received previously and mesh it with that which he/she gathered at the crime scene thereby enabling him/her to come to an impartial and logical determination of the events. In ot her words, the investigator should present the court with an accurate and true crime scene representation remaining unbiased as well as objective all through the proceedings. He/she should leave it for the court to weigh the value of the evidence and determine innocence or guilt (Fish, Miller & Braswell, 2010). Crime Scene Investigator Network (n.d) further records that a crime scene investigator has no substitute for a thoughtful and careful approach, and that he/she must not jump into making immediate conclusions regarding what happened founded on limited evidence. Instead, he/she must come up with several different theories of the crime, keeping those that incoming information at the scene do not eliminate. Rational deductions regarding what happened are generated from information from witnesses as well as the scene appearance. These theories assist in guiding the investigator in documenting specific conditions and identify valuable proof. According to Ruslander (2007), a crime s cene

Central Park Five and Scotts Brothers Article Example | Topics and Well Written Essays - 250 words

Central Park Five and Scotts Brothers - Article Example From this paper it is clear that the crime of rape/sexual assault in the context of these two cases is a race crime. It is imagined that since the Black and Latino  boys were around when the rape cases occurred, they are expected to have a link with the occurrence. Black and Latino  have long been linked to crime cases.This study outlines that  for Scottsboro Boys, the press mobilized the public to always consider the sentence on the boys a miscarriage of justice. The media always questioned the way in which the case was conducted. The same applied for The Central Park Five that had the press always insisting that the boys were innocent and the case was simply made-up. For the two cases, the fact that the reporter considers most contemptible is the reality that the youth of the boys in question was robbed. For The Central Park Five, he is shocked that the police ignored there existing no physical evidence. For Scottsboro Boys, I am surprised that only black boys were arrested.   Miscarriage of justice is evident in the two cases. As Burns et al indicate, it is true that Raymond, Kevin, Antron, Yusef and Kharey witnessed weird behaviors in the park. Forcing them to confess to the rape case is indeed illegal. The same applies to Scottsboro Boys who were falsely accused of the rape of two women in 1931 whilst on a train. The constitutional right to have proper evidence prior to sentencing was violated.

Date Rape Crime Statistics Essay Example | Topics and Well Written Essays - 1250 words

Date Rape Crime Statistics - Essay Example The fact that the parties knew each other or that the woman willingly accompanied the man are not legal defenses to a charge of rape, although one Pennsylvania decision ruled that there had to be some actual physical resistance." The term 'rape' is a broader domain that involves a variety of sexual assaults. These can be classified on the basis of the level of acquaintance between the rapist and the victim, on the basis of number of rapists, on the basis of the consent of the victim, age of victim etc. It is different from other types of rape like stranger rape, spousal rape or statutory rape. Date Rape is the sexual assault by someone, whom the victim knows; whereas, as it is obvious from name, the stranger rape is committed by the person whom victim never knew before. It is interesting to note that, contrary to what is commonly believed, date rapes are more common than the stranger one. Spousal rape is the act of rape by the spouse. The legal status of this kind of rape is disputed in many constitutions. Statutory rape refers to rape when the consent of victim exists, thus no force or threat is applied, but the age of the victim is less than the Age of Consent, the age when one is allowed to give his/her c onsents for the sexual assault. The use of these drugs, especially that of alcohol is most c... Rohypnol is one common example of Benzodiazepines. It causes amnesia to a varying level. Gamma-hydroxybutyrate It has an affect very similar to alcohol. Other drugs Ketamine is a dissociative anaesthetic, and MDMA (Ecstasy) is an empathogenic phenylethylamine. Chloral hydrate has a sedative/hypnotic effect similar to that of benzodiazepines. (Francis, 1996) The use of these drugs, especially that of alcohol is most common. Moreover, use of these drugs in the date rape is yet popular, since the rapist can easily let the victim have the drug without the victim's awareness, on account of his acquaintance with the victim.(Hodgson and Kelly, 2007) The Victim Offender Relationship: Unlike the popular belief, the ratio of date rape is far greater than that of stranger rape. In Canada, the acquaintance rape accounts for approximately 64% in 2004. (Criminal Victimization in Canada survey, 2004), while the same accounted for 67 % in United States of America. (Criminal Victimization in United States of America survey, 2004) Approximately 28% of victims are raped by husbands or boyfriends, 35% by acquaintances, and 5% by other relatives. (Violence against Women, Bureau of Justice Statistics, U.S. Dept. of Justice, 1994) However, these statistics are yet far below the reality on account of different reasons. First of all, there is a common hesitance to report the event. In the United States in 2004, only 35.8 percent of rape/sexual assault crimes were reported to the police, according to the National Crime Victimization Survey. The FBI estimates that only 37% of all rapes are reported to the police. U.S. Justice Department statistics are even lower, with only 26% of all rapes or attempted rapes being reported to law enforcement officials. Furthermore, the definition of various

Case Analysis Essay Example for Free

Case Analysis Essay Strategic Human Resource Management Unit 1 What is Strategic Management, and why is it critical to the success of an organization in meeting its goals and mission? Strategic management is setting priorities and goals within a business. It’s used with upper management to strengthen a company and prepare for future outcomes. Making a product that is highly profitable and easy for customers to use and benefit from is the main focus of Apple, Inc. The organization of Apple, Inc. started in the 1970’s and has been very profitable since. In 1978 they sold the Apple II and made billions of dollars from the product in less than three years. Between 1983 and 1984 Apple, Inc. lost sales and have fell into a crisis because of the slow processor speed and the compatible software. During this time it was hard for the organization due to competition. The problem Apple Inc. was facing at this time is other companies have found easier and faster ways for people to use the different products other than Apple, Inc. , during the 1985-1993 Apple, Inc. turned global, thus making sales up to 1 billion and was the most profitable PC Company in the world. Being able to turn any company global in an organization is very profitable, most people like new products. The beginning of 1993-1997 Apple Inc. starting playing a role in K-12 grade helping out the school systems with education with the product and this helped them out tremendously. By 2008 Apple Inc. started charging premium prices on their product knowing that with their name would be sold all over the nation. They also came out with the iPod roughly selling over 150 of them. This was giving the customer portable music and other exiting things and they still sell to this day. Today Apple, Inc. is one of the top rated organizations for iPhones, iPods, iPads, computer systems and much more. The only problem with Apple, Inc. now in this day in age is the competition. There are a lot more companies that are coming out with the same product just a different name. For example, the Kindle Fire is the same thing as the iPad, just a different name brand. A lot of people are purchasing the competitors product instead of the Apple name brand product. The reason behind this is that people would rather pay $200. 00 dollars for a Kindle Fire verses $500. 0 for the Apple iPad. Apple, Inc. needs to lower prices for their products so more and more people with purchase them. In years to come this is a critical problem that Apple, Inc. faces, to be successful in any organization you have to think like the customers. Majority of the customers are going to try and same money and buy the generic brand verses the name brand product. What Apple needs to do is, if they start seei ng a drop in profit they would need to start lowering prices down to match their main competitors so that more people will purchase their product. One of the main problems in 2013 is Apple iPad verses Amazon Kindle Fire. â€Å"The Amazon Kindle Fire has been called a potential iPad-killer by the media† states (Nations, D). The Amazon Kindle Fire is $199 and can do everything the Apple iPad and do. They are very similar and it’s making the customer purchase the Kindle Fire instead. When looking at both products â€Å"Instead of looking at the Kindle Fire verses the iPad in a direct match up of features, which would be about like comparing a Ford Escort to a Mercedes, (Nations, D). This is a great example of not only just the Amazon Kindle Fire verses Apple iPad, its everyday life. From the groceries that customers buy at the store to clothing lines at a local mall. Everything has a generic name and lower price and most of the top name brands are sold and get good profit but a lot of people are trying to save money for more important things like their children’s college or a vacation for the family, or just trying to get by with bills. So this would be a good example of why the Kindle Fire is being called the iPad-killer, because more likely people will purchase the Kindle for the lower price. Some of the advantages of the Kindle Fire is the low cost and being able to use the amazon app store to purchase games, books, movies and much more. Some advantages of the iPad is it’s faster, has more storage and dual face cameras on the iPad 2. Both of the products use full-color back-lit displays so both of them will have problems in direct sunlight. Both of them are good but the main concern is the price. To stay successful you have to look at your main competitors products and come out with bigger and better things to catch the customer’s eye. With doing this the product needs to be reasonably priced and affordable to the public. Otherwise the customers will go for the cheaper one to save costs. A good example of this is looking deeper into strategic management and why it is important. Strategic management is all about change, and facing challenging situations in the work place. Being able to except the change and work through it, and make important decisions and implement appropriate strategies. Some other examples of strategic management are resource limitations, changing environment, matching competitors, and improved decision making. Resource limitations is being able to deal with limited resources of money. A lot of business go through this and Apple Inc. went through it back in 1983-1984 Apple, Inc. was in a crisis and had to make important changes to make more profit. Matching competitors is very important, a business could go down in profit if other companies come out with a similar product. Improved decision making is very important due to change in a product or being able to come out with a new product. Strategic management is setting priorities and goals within a business. It’s used with upper management to strengthen a company and prepare for future outcomes. References Nations, Daniel, ed. The Amazon Kindle Fire vs the Apple iPad. N. p. , n. d. Web. 5 May 2013. lt;http://ipad. about. com/od/Tablet_Computers_eReaders/a/The-Amazon-Kindle-Fire-Vs-The-Apple-Ipad. htm Sind, M. , amp; Yoffie, D. B. (February, 2008) Apple, Inc. (Case Study) Retrieved from Harvard Business Online website

Analysis on Current Venture Capital Market in China

Analysis on Current Venture Capital Market in China Introduction The huge consumer market potential and booming economy in China attract enormous foreign direct investments to capitalize this unprecedented opportunity. Foreign venture capital is not exceptional from this trend. They, however, still have to face constant challenges from regulations, market practices and business cultures in China. To be successful in this marketplace totally different from their origin, foreign venture capitals need to adapt their previous strategies and experiences and test it through trial and error. This report is to get overall picture about current venture capital market in China. Then it will focus on the market position of foreign venture capitals. The report is followed by the analyses and summary on investment and exit strategies used by foreign venture capitals. Finally, the report will discuss the potential trend in China venture capital market. Key Objectives To get in-depth analysis on current venture capital market in China and foreign venture capitals market position in China. To analyze and summarize the investment strategies and exit strategies used by foreign venture capital in China. To make prediction on future market trend, especially foreign venture capital. Key Chapters General introduction on venture capital Historical development and current venture capital market in China Detail market position analysis on foreign venture capital in China Investment strategies of foreign venture capital in China Exit strategies of foreign venture capital in China Future trends in China venture capital market Introduction on Venture Capital Venture capital is source of funds to small firms that cannot establish credit relationships with bank or other financial institutions. As Gompers (2001) states: Companies that lack substantial tangible assets and have uncertain prospects are unlikely to receive significant bank loans. These firms face many years of negative earnings and are unable to make interest payments on debt obligations. Start-up high tech firms are exactly the type of firms that banks are least likely to lend to because of poor information availability and lack of tangible assets or assets that can be readily evaluated. Firms developing software or new technology for the communications or biotech industries are largely investing in human capital. In a nutshell, the VC firm is a relative small financial services professional organization that functions primarily to: (a) assess business opportunities; (b) provide capital; and (c) monitor, advise and assist the firms in its portfolio. By investing, the venture capitalists accept substantial tranche of illiquid equity that converts their status to something like partners to the entrepreneur. The goal of the venture capitalist is not only to increase the value of that equity but also to eventually monetize the investment through a liquidity event such as an initial public offering or sale to other investors. The other way of reaping the reward is liquidation due to the firm failure and bankruptcy. In all of these scenarios, the venture capitalist exits their investment to complete the VC process. The venture capital cycle is briefly visualized in below chart. Chart 1 Fund flow of Venture Capital Cycle Source: National Venture Capital Association Yearbook 2008 The National Venture Capital Association in the United States defines venture capital as money provided by professionals who invest alongside management in young, rapidly growing companies that have potential to develop into significant economic contributors. There are a number of key attributes associated with VC that distinguish it from other equity capital investments. Venture capital normally focuses on small firms that have great growth potential. These firms usually are not mature enough to be traded in public equity markets. Compared with public equity investment, venture capital investment has poorer liquidity with more severe information asymmetry and higher investment risks. Venture capital investment is also different from angel capital. Managers of angel capital use their personal money to invest. In contrast, investments professionals who raise money from other investors manage venture capital. Angle capital invests more often in the seed stage of the start up firms than venture capital does. Finally, venture capital is different from non-venture private equity investments (such as buyouts, restructure, and mezzanine funds). Firms backed by venture capital usually have considerable growth potential. For these firms, the cash flow generated from operations is usually insufficient to support finance growth and debt financing is usually not available. In contrast, private equity funds target more mature firms that have stable cash flows and limited growth potential. The Table 1 below summarizes the investment stages and types of funding for different investment styles. Table 1. Types of Funding and Investment Stage Source: A Guild To Venture Capital (3rd edition) by Irish Venture Capital Association There are five stages (BVCAPWC, 1998) in the development of venture-backed companies, which can be defined as: 1. Seed 2. Start-up 3. Other early stages (exploration) 4. Expansion 5. Maturity (exit). The definition of the company stage is different with the definition of the financing round. The negotiation of a VC investment is a time-consuming and economically costly process for all parties. Neither the VCs nor the portfolio firms want to repeat the process very often. Therefore VCs have to balance the cost of negotiation and potential risks from one time investment. Typically, a VC will try to provide sufficient financing for a company to reach some natural milestone, such as the development of a prototype product, the acquisition of a major customer, or a cash flow breakeven. Each financing event is known as a round. So the first time a company receives financing is known as the first round (or Series A), the next time the second round (or Series B), and so on and so forth. With each well-defined milestone, the parties can return to the negotiating table with some new information. These milestones differ across industries and depend on market conditions. A company might receive several rounds of investment at any stage, or it might receive sufficient investment in one round to bypass multiple stages. One special situation is the down round. It is when the company does not meet milestones and the VC still needs to invest but at a lower valuation than prior round of financing. Venture Capital in China Why invest in China? There are four major popular arguments behind for the investment rush to east. Reason 1: High Rate of Economic Growth Chinas impressive economic growth for the past 30 years, averaging between 8% to 10% real growth per year, has been the envy of the developing world. The size of Chinese economy by the end of 2006 reached US$2.62 trillion, 13 times larger than that in 1978 when measured in constant RMB (MasterCard Worldwide Insight, 2007). According to Goldman Sachs China economic research (2003), per capita GDP expect to grow from less than $5,000 at that time to more than $30,000 in 2050 (refer to Chart 2). China will have a middle class of more than 500 million by 2025 larger than the entire population of the United States. It represents a huge emerging demand for everything from integrated circuits to cars. 500M mobile users, 130M Internet users, 104M broadband users and 4.5M college graduates every year could all transfer into huge business opportunity (represented in Chart 3). Based on the estimation (Chart 4) from Mckinsey, there will be sustainable market growth to 2025 in every business that related with peoples life and daily consumption. Huge opportunities for venture capital are Internet (B2B, B2C, C2C, online gaming, website portal and web 2.0), semiconductors, technologies (clean energy, medical, biotech and traditional manufacturing), and consumer businesses (food, clothes, shopping and other entertainments). Chart 2 China GDP Growth Forecast (2000-2050) Source: Goldman Sachs 2003 Chart 3 China Energy/Material supply imbalance (2010) Source: Goldman Sachs 2003 Chart 4 Urban Chinese Consumers Demand Forecast (2004-2025) Source: National Bureau of Statistics of China; Mckinsey Global Institute Analysis Reason 2: Inefficient Capital Market In the United States and Europe, private and public capital markets compete as sources of capital. However, China does not yet have an equity culture despite the adoption of market-oriented policies. In China, the public equity market lists inefficient and unappealing state owned enterprises (SOE) most of the times. And government holds roughly 60-70% of share capital of most listed companies. Few private firms are listed in the stock market due to legal and policy hurdle. Chinas bond market is similarly underdeveloped. Chinese corporate bonds account for less than 2% of corporate financing. Thin trading between banks and investors makes issuing bonds unattractive for fundraising or investing. Insurers and fund managers therefore have few fixed-income securities to hedge against mid- and long-term risks. The corporate bond market just started to function in late 2007 by allowing public listed firms to issue corporate debts. Around 95% of financing for Chinese companies now is still provided by bank loans. The domestic banks, however, have tendency to provide loans to stated owned company rather than private firms, especially small and medium businesses (SMB). With the poor functioning financial markets and policy discrimination, venture capital and private equity become important sources of growth capital for private firms. It is one of the key reasons that venture capital is so popular among private firms in China across different industries even including traditional industries like food, hotel and travel etc. Reason 3: Creative Solutions/Early Adopting Consumers One of the most unexpected attributes of the emerging Chinese market economy is how consumer-savvy its entrepreneurs are. Even after decades of centralized economic planning, the Chinese remain consummate creators and marketers of interesting products. Definitely the creativity and innovations are only limited in certain business for talents availability and their professional capabilities. Online gaming, wireless instant messaging, and wireless value added services are just three markets that the Chinese more or less created out of thin air. Each of these businesses has growing customer bases (and have spawned successful public companies like Shanda, Netease, Tencent, and Linktone). But none of them has significant participants yet in the United States. Different consumer behaviors contribute to this phenomenon as well. In below case study on Tencent, it provides a great example on how to innovate the Internet product offerings to cater the needs of online generation. Case study: QQ of Tencent (Adapted from www.tencent.com) Tencent (listed in HK stock exchange) is the #1 Instant Messaging (IM) service provider in China. Tencents IM community counts over 270 million active accounts and is said to be covering 95% of Chinese Internet users and 70% of Chinas IM market (MSN/Yahoo account for the rest market). QQ is the brand for its IM. Same as other IMs, QQ is a free tool to use. Tencent, however, came up the idea to generate revenue stream by allowing users to buy and exchange virtual items (clothes and background image) online to decorate his or her QQ head icon. Tencent even created its own cyber currency called Q Bi and 1 Q Bi = 1RMB (0.14 USD) to facilitate the transaction and reduce barrier of online purchasing. The estimated revenue generated from those Internet value added services in 2007 is around USD$360M. Reason 4: Risk-taking, Innovative Culture In the last fifteen years, the privatization reform is one of the critical forces in stimulating China economy growth. This privatization wave also generated tens of thousands entrepreneurs. The business culture is naturally comfortable with risks and with developing innovative ways to solve problems and create wealth both for individuals and for society at large. The successful stories of VC backed entrepreneurs further promote the risk taking culture in China and the awareness and popularity of venture capital. The Focus Media case below illustrates the power of business model innovation by its unprecedented expansion speed ever in Chinas business history. There is no doubt that foreign VCs played an important role in this story to make Focus Media successful. Case study: Focus Media China (Adapted from www.focus.com) Founded in 2003, Focus Media is Chinas largest Digital Media Group in China now. The founder, Mr. Jiang Nanchun, came up with an innovative approach in operating out-of-home advertising network using audiovisual digital displays. Basically, the idea was to display the LCD near or in the elevators in commercial centers (like office buildings and shopping malls). While waiting for or in the elevators, people would watch the contents advertised in those LCDs. By selecting and contracting with high quality commercial buildings, Focus Media was able to quickly build up its network scale and attract many advertising contracts. Tow foreign VC firms, Soft Bank and UCI, invested in the first round. And another five VCs, CDH, TDF, DFJ, WI Harper and Milestone, invested in the second round. Two years after operation, Focus Media was listed on Nasdaq with USD$172M IPO and now it is part of Nasdaq 100 index. Historical development Infancy stage: 1984 1995 In 1984, the Research Center of Science and Technology Development of the State Science Technology Commission (SSTC) (now the Ministry of Science Technology or MOST) cooperated with British experts to study how to develop high-tech in China. The British experts proposed that venture capital should be developed if China wanted to foster high technology. In 1985, the Central Commission of the Chinese Communist Party and the State Council pointed out in the Decision of Science-Technology System Reform that venture capital could be set up to support the work of developing high-tech with quick change and high risk. It was the first time that the concept of venture capital appeared in an official Chinese Government document. With the government decision to develop high technology industries, the Central Government and some local governments financed and set-up series of investment institutions that intended to pursue the venture capital business from 1985 to 1995. Examples are China New Technology Venture Capital Company, Shenyang Science-Technology Venture Development Risk Center, Shanxi Head Office of Science-Technology Fund Development, Guangdong Science-Technology Venture Capital Company, Shanghai Science-Technology Venture Capital Company, and the Science-Technology Venture Capita Company of Zhejiang Province. Moreover, venture centers (i.e., high tech incubators) were set-up in the majority of national high-tech parks. Simultaneously, some overseas investment banks, funds and venture capital institutions also started to expand their business into China. For example, the Pacific Technology Venture Capital Fund subordinate to IDG entered China in 1992. It cooperated with science-technology commissions in Beijing, Shanghai and Guangdong, and set-up a number of venture capital companies focused on investing in technology companies. Also, some foreign capital or joint stock investment institutions established venture capital businesses. Asia Venture Capital Journal (AVCJ, 2001) shows that $16 million was raised for venture capital investments in 1991. In 1992, the total funds raised jumped to $583million, a thirty-fold increase compared with the $16 million in 1991. The first wave reached its peak in 1995, with $678 million in investment (AVCJ, 2001).The first wave of venture capital investments was brought by international venture capitalists. The international venture capital firms accounted for more than 95% of the total fund raised in the early and mid 1990s. The absolute dominance of international venture capital funds in China in the early and mid 1990s was mainly due to Chinas strict regulations against fund-raising and the general lack of awareness of venture capital in China. Private fund-raising by individuals or private firms without government approval was strictly prohibited in China. This strict regulation essentially removed the possibility for venture capitalists to raise funds within China. It meant that only international venture capital funds and state owned enterprises (SOE) venture capital funds could operate. International venture capital funds could bypass the regulation because they were incorporated and they raised funds outside of China. SOE funds relied on government appropriation as funding sources and did not have this fund raising problem either. Early Growth: 1996 2001 From the mid-1990s, the perception of venture capital shifted from being a type of government funding to being a commercial activity necessary to support the commercialization of new technology. As there were still no laws or regulations about setting up foreign venture capital institutions in China, many overseas investment institutions established their branches in Hong Kong, aiming to invest in the mainland. They had also located representative offices in some major cities, primarily Beijing and Shanghai. Most of the VCs active in China in the early 90s were American firms. The VC industry in the U.S. had matured and attracted a significant amount of funds. Shortly after 1995 a sharp increase from US$5 billion to US$110 billion in funds raised created the phenomenon of money chases deals (Gompers Lerner, 1999). A cadre of experienced American VCs started searching the world for investment opportunities, attempting to replicate the Silicon Valley model. Since 1998, there had been a discernible recognition of the critical success factors necessary to create an environment in which venture capital could operate smoothly and flourish. Specifically, the Governments official decision to support the development of venture capital was the key factor that had allowed Chinas venture capital industry to come into being in a new and more positive environment. In Beijing, alone, there were about 30 independent venture capital institutions, whose capital amounted to an estimated $450 million. In Shenzhen, there were at least 20 independent venture capital institutions with capital amounted to over $500 million. After 2000, China also experienced hard landing in its young VC industry due to dotcom bubble burst and came with huge casualties. It took the VC community 3 years to recover. Fast Growth: 2002 present Although initial government-backed investment operations generally failed, there has been resurgence in venture capital activity since Chinas admission to the WTO (Kenny, Han and Tanaka 2002). Capital available for investment in Mainland China keeps a steady growth trend from 2002. The capital size was increased to US$21.32B by 2007 from US$10.50B in 2002. The average compound annual growth rate (CAGR) reaches 15.2%. Venture capital investment grew rapidly from $480 million in 2002 to more than $3,247 million in 2007, invested in 440 China mainland or mainland-related enterprises (Zero2IPO 2007). According to Zero2IPO report, USD$4B VC funds were raised each year in 2005 and 2006 for China investment. But Chinas annual consumption was no more than $2B. The money chasing deal phenomenon started to emerge in China. Many foreign VC funds, especially first-time funds raised after 2005, had the pressure to pour out investment quickly to avoid US dollar depreciation against RMB and to get better deals under fierce competition. While the funding supply multiplied, quality deal flows did not increase at the same pace. Under the simple supply and demand mechanism, valuations of the China deal kept at relative high level. However, considering the fact that a big portion of funding was focusing on local value-add service segments (i.e. internet, web2.0 and broadband etc.), the issue of funds over-supply was sector specific. To get higher return under the competition, VC firms started to invest in traditional business models such as hotels, travels and fast food chains beyond their core activities such as TMT (Technology, Media and Telecom) or Internet related businesses. It was the special phenomenon happened in China now that VCs were more like PE. Legal and Regulations According to Megginson (2004), the differences in the design and the degree of development of the PE/VC industry are due to institutional factors, with the countrys legal system being paramount. Two major factors are paramount in evaluating legal system: contract law enforcement and protection of shareholder rights through effective corporate governance. Cumming and Macintosh (2002) observed that PE/VC managers in high enforcement countries had a greater tendency to invest in high-tech SMBs, exit through IPOs rather than buybacks and obtain higher returns. Cumming et al. (2004) further examined legal system effects on governance structure. Under better legal systems: the faster the origination and screening of deals; the higher the probability of syndication; less frequently funds of the same organization used to invest in a given company; the easier the board representation of investors; the lower the probability that investors required periodic cash flows prior to exit; and the higher the probability of investment in high-tech companies. Lerner and Schoar (2005) show that in a bad legal environment, PE/VC managers tend to buy controlling stakes, leaving the entrepreneurial team with weaker incentives. Interestingly, valuations tend be positively correlated with the quality of the legal environment. Kaplan et al. (2003) go deeper into the contractual aspects and found that rights over cash flows, liquidation and control, as well as board participation vary according to the quality of the legal system, the accounting standards and investor protection across countries. However, more sophisticated PE/VC managers tend to operate in the U.S. style irrespective of local institutional concerns. The authors show that managers operating with convertible preferred stocks are less prone to failure (as measured by survivorship rate). The results suggest that the U.S. contractual style can be efficient in different institutional environments. Bottazzi et al. (2005) corroborate some of the previous results and obtain further evidence on the home-country effect (PE/VC managers operating abroad tend to maintain the investment style used at home). This is observed in managers based in both good and bad legal environments. The Chinese regulations governing foreign venture capital investment are chaotic and rapidly changing. In 2005, Chinese authorities issued new guidelines (effective in 2006) intending to foster domestic venture capital firms. There is no specific regulation to monitor and stimulate the VC activities in China. The new guidelines recommended that local governments provide financing assistance, favorable tax treatment, and direct investment in Chinese venture capital firms. They also provide less stringent capitalization, investment amount, investor qualification and regulatory requirements than those applicable to FICVEs (Guerrera, Yee and Yeh, 2005). FIVCEs instead are governed by 2003 regulations that include high investment and qualification thresholds, government approval requirements, and strict foreign exchange limitations on the ability to remit profits and dividends back to the investor (Hoo, et al 2005a). Substantial legal and de facto restraints on the ability of FIVCEs to access the stock markets in China and overseas for IPO listings make exit strategies extremely difficult. For these reasons, foreign venture capital firms investing in China usually do not use FIVCEs but rely on offshore holding companies created to receive their investments. Foreign venture capital firms (most of which are U.S. based) investing in China generally have done so through the restructuring of Chinese companies into offshore investment vehicles. These enable an easier exit from investments either by selling shares on international stock markets or through a trade sale to another foreign buyer. In January of 2005, Chinese authorities brought these transactions to a virtual standstill, however, with the issuance of new regulations preventing any onshore resident from establishing, controlling or owning shares in an offshore company without the approval of the Government, either directly or indirectly. The regulations were intended to stop managers of SOEs receiving venture capital investments from stripping state assets and selling them cheaply to overseas companies, and to preclude domestic companies from using the overseas vehicles to gain foreign investor tax exemption status. However, they choked off legitimate transactions as well. There were no government approvals of offshore investment transactions in 2005. With only limited exceptions for transactions in process, foreign venture capital financing through offshore investment vehicles screeched to a halt in 2005 (Borrell and Jerry, 2005). Then, in November of 2005, the Chinese authorities issued superseding regulations. These require registration of offshore investment vehicles with the State Administration of Foreign Exchange (SAFE), but do not require the agencys approval of the transaction. They also require repatriation of all distributions of income from the investment within a fixed time frame. Like the previous regulations, the new ones do not describe specifically the registration process, the procedures involved, the scope of review nor the time required for completion, creating substantial uncertainty for foreign venture capital investors (Hoo, et al 2005b). Despite this changing regulatory landscape, many U.S. based venture capital firms have active plans for substantial investments in 2006 spurred by Chinas high growth potential, the success of recent venture-backed startups on the NASDAQ including Baidu.com and China Medical Technologies and by pent up demand after the 2005 halt in new investments (Borrell, Jerry and Aragon 2005). Hidden risk and solutions Lagging legislation and inexplicit policies in China created many uncertainties and entry barriers for foreign VCs. Below are summary of the critical problems: Chinas lawmaking on VC investment remains stagnant Existing laws such as Corporation Law, Joint Venture Law, Patent Law, etc., in many aspects even contradict VC investment. Does VC investment count as foreign investment? What status and treatment should it enjoy? The concerned authorities cannot provide clear answers to these questions. Its not clear that the amount of shares that foreign venture capital is allowed to hold when partnering with Chinese enterprises, and the way foreigners to remit in/out of foreign exchange are poorly defined. There are three available approaches for foreign venture capital firms to enter China venture capital market legally. Establishing offshore venture capital fund focusing on China Establishing a foreign invested VC firm in China (Joint VC with local player/Wholly Owned Foreign firm) as a legal person entity Establishing a foreign invested VC firm in China (Joint VC with local player/Wholly Owned Foreign firm) as a non-legal person entity To avoid the legal and regulation barriers, foreign venture capital funds usually takes the offshore investment route. Foreign VCs will use offshore USD fund to invest into China deals offshore holding entities with all equity activities happening outside of Chinese jurisdiction. The distinction of USD offshore holding investment and RMB local entity investment is a particular phenomenon in China. Offshore holding arrangement is a preferred structure for Chinese entrepreneurs and VCs as it provides a feasible and practical route for funding, divestment and all equity events. Its advantage and attractiveness to Chinese entrepreneurs and VC communities: Go away from laws and regulations in China. Many of them are not friendly to venture activities, such as lack of preferred shares, stock options limitation, double tax etc. Bypassing capital account control on foreign exchange. More flexible and usually profitable divestment options by overseas IPO, MA or trade sales. Offshore route investment involves the following steps: The Chinese founders set up an offshore holding company in Cayman Island or BVI with the shareholding structure and management control mirroring those of their local company in China. With kind of swap scheme, transferring the equity they hold in the Chinese local company to the offshore holding. This will typically convert the local company into a WFOE (Wholly Foreign Owned Enterprise). The offshore holding company will then be the vehicle seeking VC investment, future funding as well as for listing or be merged. All equity events happen in offshore. Companies funding and IPO proceeds will be kept offshore, and remit into China as and when operation required. Chinese founders assets, rights and proceeds stay offshore. The whole exercise is carried out essentially with an IPO at an overseas stock exchange, such as NASTAQ or Hong Kong Stock Exchange in vision. (The concept and process is visualized in chart 5.) Chart 5 Foreign VC Offshore Investment Process Source: A legal perspective on Chinas venture capital rush, Mar 2006 Restrictions in Chinas corporate regulations and limitations at the domestic capital markets explain foreign VCs preference in taking offshore route to organize their China investment. VC investors rely normally on preferred stocks or convertible preferred stock to secure a preferential return. Chinese corporate regulations allow only one class of common stock for a FIVCE with investment in a Chinese portfolio company. Notably, local VC firms would have the possibility to arrange preferred stock scheme with their investee company according to a newly issued charter regulation applicable to domestic VC firms. This gives rise to concern on the principle of national treatment under WTO law. Moreover, China domestic stock market does not provide a ready access for venture-backed companies. The conditions for listing at Shanghai or Shenzhen main-board market are too stringent for high-tech start-up companies. Even if listing conditions could be met, the queue in the pipeline waiting for a listing window is at the moment frustrating. In fact, the two domestic stock exchanges have halted the IPO since two years in the call for addressing the notorious overhang of nontransferable legal person shares. The undergoing endeavor is focusing on floating all stock legal person shares. Since the value of stock legal person shares is roughly twice of those trading in the stock exchange, full floating of legal person shares at stock is imposing acute challenge on the market place. This would mean that the suspension on IPO of new shares would be expected for a rather extended term. By leveraging on an offshore holding structure, foreign VCs could take advantage of the corporate governance in a jurisdiction where they feel most comfortable and bypass the restrictions under Chinese corporate law. VCs could take the Analysis on Current Venture Capital Market in China Analysis on Current Venture Capital Market in China Introduction The huge consumer market potential and booming economy in China attract enormous foreign direct investments to capitalize this unprecedented opportunity. Foreign venture capital is not exceptional from this trend. They, however, still have to face constant challenges from regulations, market practices and business cultures in China. To be successful in this marketplace totally different from their origin, foreign venture capitals need to adapt their previous strategies and experiences and test it through trial and error. This report is to get overall picture about current venture capital market in China. Then it will focus on the market position of foreign venture capitals. The report is followed by the analyses and summary on investment and exit strategies used by foreign venture capitals. Finally, the report will discuss the potential trend in China venture capital market. Key Objectives To get in-depth analysis on current venture capital market in China and foreign venture capitals market position in China. To analyze and summarize the investment strategies and exit strategies used by foreign venture capital in China. To make prediction on future market trend, especially foreign venture capital. Key Chapters General introduction on venture capital Historical development and current venture capital market in China Detail market position analysis on foreign venture capital in China Investment strategies of foreign venture capital in China Exit strategies of foreign venture capital in China Future trends in China venture capital market Introduction on Venture Capital Venture capital is source of funds to small firms that cannot establish credit relationships with bank or other financial institutions. As Gompers (2001) states: Companies that lack substantial tangible assets and have uncertain prospects are unlikely to receive significant bank loans. These firms face many years of negative earnings and are unable to make interest payments on debt obligations. Start-up high tech firms are exactly the type of firms that banks are least likely to lend to because of poor information availability and lack of tangible assets or assets that can be readily evaluated. Firms developing software or new technology for the communications or biotech industries are largely investing in human capital. In a nutshell, the VC firm is a relative small financial services professional organization that functions primarily to: (a) assess business opportunities; (b) provide capital; and (c) monitor, advise and assist the firms in its portfolio. By investing, the venture capitalists accept substantial tranche of illiquid equity that converts their status to something like partners to the entrepreneur. The goal of the venture capitalist is not only to increase the value of that equity but also to eventually monetize the investment through a liquidity event such as an initial public offering or sale to other investors. The other way of reaping the reward is liquidation due to the firm failure and bankruptcy. In all of these scenarios, the venture capitalist exits their investment to complete the VC process. The venture capital cycle is briefly visualized in below chart. Chart 1 Fund flow of Venture Capital Cycle Source: National Venture Capital Association Yearbook 2008 The National Venture Capital Association in the United States defines venture capital as money provided by professionals who invest alongside management in young, rapidly growing companies that have potential to develop into significant economic contributors. There are a number of key attributes associated with VC that distinguish it from other equity capital investments. Venture capital normally focuses on small firms that have great growth potential. These firms usually are not mature enough to be traded in public equity markets. Compared with public equity investment, venture capital investment has poorer liquidity with more severe information asymmetry and higher investment risks. Venture capital investment is also different from angel capital. Managers of angel capital use their personal money to invest. In contrast, investments professionals who raise money from other investors manage venture capital. Angle capital invests more often in the seed stage of the start up firms than venture capital does. Finally, venture capital is different from non-venture private equity investments (such as buyouts, restructure, and mezzanine funds). Firms backed by venture capital usually have considerable growth potential. For these firms, the cash flow generated from operations is usually insufficient to support finance growth and debt financing is usually not available. In contrast, private equity funds target more mature firms that have stable cash flows and limited growth potential. The Table 1 below summarizes the investment stages and types of funding for different investment styles. Table 1. Types of Funding and Investment Stage Source: A Guild To Venture Capital (3rd edition) by Irish Venture Capital Association There are five stages (BVCAPWC, 1998) in the development of venture-backed companies, which can be defined as: 1. Seed 2. Start-up 3. Other early stages (exploration) 4. Expansion 5. Maturity (exit). The definition of the company stage is different with the definition of the financing round. The negotiation of a VC investment is a time-consuming and economically costly process for all parties. Neither the VCs nor the portfolio firms want to repeat the process very often. Therefore VCs have to balance the cost of negotiation and potential risks from one time investment. Typically, a VC will try to provide sufficient financing for a company to reach some natural milestone, such as the development of a prototype product, the acquisition of a major customer, or a cash flow breakeven. Each financing event is known as a round. So the first time a company receives financing is known as the first round (or Series A), the next time the second round (or Series B), and so on and so forth. With each well-defined milestone, the parties can return to the negotiating table with some new information. These milestones differ across industries and depend on market conditions. A company might receive several rounds of investment at any stage, or it might receive sufficient investment in one round to bypass multiple stages. One special situation is the down round. It is when the company does not meet milestones and the VC still needs to invest but at a lower valuation than prior round of financing. Venture Capital in China Why invest in China? There are four major popular arguments behind for the investment rush to east. Reason 1: High Rate of Economic Growth Chinas impressive economic growth for the past 30 years, averaging between 8% to 10% real growth per year, has been the envy of the developing world. The size of Chinese economy by the end of 2006 reached US$2.62 trillion, 13 times larger than that in 1978 when measured in constant RMB (MasterCard Worldwide Insight, 2007). According to Goldman Sachs China economic research (2003), per capita GDP expect to grow from less than $5,000 at that time to more than $30,000 in 2050 (refer to Chart 2). China will have a middle class of more than 500 million by 2025 larger than the entire population of the United States. It represents a huge emerging demand for everything from integrated circuits to cars. 500M mobile users, 130M Internet users, 104M broadband users and 4.5M college graduates every year could all transfer into huge business opportunity (represented in Chart 3). Based on the estimation (Chart 4) from Mckinsey, there will be sustainable market growth to 2025 in every business that related with peoples life and daily consumption. Huge opportunities for venture capital are Internet (B2B, B2C, C2C, online gaming, website portal and web 2.0), semiconductors, technologies (clean energy, medical, biotech and traditional manufacturing), and consumer businesses (food, clothes, shopping and other entertainments). Chart 2 China GDP Growth Forecast (2000-2050) Source: Goldman Sachs 2003 Chart 3 China Energy/Material supply imbalance (2010) Source: Goldman Sachs 2003 Chart 4 Urban Chinese Consumers Demand Forecast (2004-2025) Source: National Bureau of Statistics of China; Mckinsey Global Institute Analysis Reason 2: Inefficient Capital Market In the United States and Europe, private and public capital markets compete as sources of capital. However, China does not yet have an equity culture despite the adoption of market-oriented policies. In China, the public equity market lists inefficient and unappealing state owned enterprises (SOE) most of the times. And government holds roughly 60-70% of share capital of most listed companies. Few private firms are listed in the stock market due to legal and policy hurdle. Chinas bond market is similarly underdeveloped. Chinese corporate bonds account for less than 2% of corporate financing. Thin trading between banks and investors makes issuing bonds unattractive for fundraising or investing. Insurers and fund managers therefore have few fixed-income securities to hedge against mid- and long-term risks. The corporate bond market just started to function in late 2007 by allowing public listed firms to issue corporate debts. Around 95% of financing for Chinese companies now is still provided by bank loans. The domestic banks, however, have tendency to provide loans to stated owned company rather than private firms, especially small and medium businesses (SMB). With the poor functioning financial markets and policy discrimination, venture capital and private equity become important sources of growth capital for private firms. It is one of the key reasons that venture capital is so popular among private firms in China across different industries even including traditional industries like food, hotel and travel etc. Reason 3: Creative Solutions/Early Adopting Consumers One of the most unexpected attributes of the emerging Chinese market economy is how consumer-savvy its entrepreneurs are. Even after decades of centralized economic planning, the Chinese remain consummate creators and marketers of interesting products. Definitely the creativity and innovations are only limited in certain business for talents availability and their professional capabilities. Online gaming, wireless instant messaging, and wireless value added services are just three markets that the Chinese more or less created out of thin air. Each of these businesses has growing customer bases (and have spawned successful public companies like Shanda, Netease, Tencent, and Linktone). But none of them has significant participants yet in the United States. Different consumer behaviors contribute to this phenomenon as well. In below case study on Tencent, it provides a great example on how to innovate the Internet product offerings to cater the needs of online generation. Case study: QQ of Tencent (Adapted from www.tencent.com) Tencent (listed in HK stock exchange) is the #1 Instant Messaging (IM) service provider in China. Tencents IM community counts over 270 million active accounts and is said to be covering 95% of Chinese Internet users and 70% of Chinas IM market (MSN/Yahoo account for the rest market). QQ is the brand for its IM. Same as other IMs, QQ is a free tool to use. Tencent, however, came up the idea to generate revenue stream by allowing users to buy and exchange virtual items (clothes and background image) online to decorate his or her QQ head icon. Tencent even created its own cyber currency called Q Bi and 1 Q Bi = 1RMB (0.14 USD) to facilitate the transaction and reduce barrier of online purchasing. The estimated revenue generated from those Internet value added services in 2007 is around USD$360M. Reason 4: Risk-taking, Innovative Culture In the last fifteen years, the privatization reform is one of the critical forces in stimulating China economy growth. This privatization wave also generated tens of thousands entrepreneurs. The business culture is naturally comfortable with risks and with developing innovative ways to solve problems and create wealth both for individuals and for society at large. The successful stories of VC backed entrepreneurs further promote the risk taking culture in China and the awareness and popularity of venture capital. The Focus Media case below illustrates the power of business model innovation by its unprecedented expansion speed ever in Chinas business history. There is no doubt that foreign VCs played an important role in this story to make Focus Media successful. Case study: Focus Media China (Adapted from www.focus.com) Founded in 2003, Focus Media is Chinas largest Digital Media Group in China now. The founder, Mr. Jiang Nanchun, came up with an innovative approach in operating out-of-home advertising network using audiovisual digital displays. Basically, the idea was to display the LCD near or in the elevators in commercial centers (like office buildings and shopping malls). While waiting for or in the elevators, people would watch the contents advertised in those LCDs. By selecting and contracting with high quality commercial buildings, Focus Media was able to quickly build up its network scale and attract many advertising contracts. Tow foreign VC firms, Soft Bank and UCI, invested in the first round. And another five VCs, CDH, TDF, DFJ, WI Harper and Milestone, invested in the second round. Two years after operation, Focus Media was listed on Nasdaq with USD$172M IPO and now it is part of Nasdaq 100 index. Historical development Infancy stage: 1984 1995 In 1984, the Research Center of Science and Technology Development of the State Science Technology Commission (SSTC) (now the Ministry of Science Technology or MOST) cooperated with British experts to study how to develop high-tech in China. The British experts proposed that venture capital should be developed if China wanted to foster high technology. In 1985, the Central Commission of the Chinese Communist Party and the State Council pointed out in the Decision of Science-Technology System Reform that venture capital could be set up to support the work of developing high-tech with quick change and high risk. It was the first time that the concept of venture capital appeared in an official Chinese Government document. With the government decision to develop high technology industries, the Central Government and some local governments financed and set-up series of investment institutions that intended to pursue the venture capital business from 1985 to 1995. Examples are China New Technology Venture Capital Company, Shenyang Science-Technology Venture Development Risk Center, Shanxi Head Office of Science-Technology Fund Development, Guangdong Science-Technology Venture Capital Company, Shanghai Science-Technology Venture Capital Company, and the Science-Technology Venture Capita Company of Zhejiang Province. Moreover, venture centers (i.e., high tech incubators) were set-up in the majority of national high-tech parks. Simultaneously, some overseas investment banks, funds and venture capital institutions also started to expand their business into China. For example, the Pacific Technology Venture Capital Fund subordinate to IDG entered China in 1992. It cooperated with science-technology commissions in Beijing, Shanghai and Guangdong, and set-up a number of venture capital companies focused on investing in technology companies. Also, some foreign capital or joint stock investment institutions established venture capital businesses. Asia Venture Capital Journal (AVCJ, 2001) shows that $16 million was raised for venture capital investments in 1991. In 1992, the total funds raised jumped to $583million, a thirty-fold increase compared with the $16 million in 1991. The first wave reached its peak in 1995, with $678 million in investment (AVCJ, 2001).The first wave of venture capital investments was brought by international venture capitalists. The international venture capital firms accounted for more than 95% of the total fund raised in the early and mid 1990s. The absolute dominance of international venture capital funds in China in the early and mid 1990s was mainly due to Chinas strict regulations against fund-raising and the general lack of awareness of venture capital in China. Private fund-raising by individuals or private firms without government approval was strictly prohibited in China. This strict regulation essentially removed the possibility for venture capitalists to raise funds within China. It meant that only international venture capital funds and state owned enterprises (SOE) venture capital funds could operate. International venture capital funds could bypass the regulation because they were incorporated and they raised funds outside of China. SOE funds relied on government appropriation as funding sources and did not have this fund raising problem either. Early Growth: 1996 2001 From the mid-1990s, the perception of venture capital shifted from being a type of government funding to being a commercial activity necessary to support the commercialization of new technology. As there were still no laws or regulations about setting up foreign venture capital institutions in China, many overseas investment institutions established their branches in Hong Kong, aiming to invest in the mainland. They had also located representative offices in some major cities, primarily Beijing and Shanghai. Most of the VCs active in China in the early 90s were American firms. The VC industry in the U.S. had matured and attracted a significant amount of funds. Shortly after 1995 a sharp increase from US$5 billion to US$110 billion in funds raised created the phenomenon of money chases deals (Gompers Lerner, 1999). A cadre of experienced American VCs started searching the world for investment opportunities, attempting to replicate the Silicon Valley model. Since 1998, there had been a discernible recognition of the critical success factors necessary to create an environment in which venture capital could operate smoothly and flourish. Specifically, the Governments official decision to support the development of venture capital was the key factor that had allowed Chinas venture capital industry to come into being in a new and more positive environment. In Beijing, alone, there were about 30 independent venture capital institutions, whose capital amounted to an estimated $450 million. In Shenzhen, there were at least 20 independent venture capital institutions with capital amounted to over $500 million. After 2000, China also experienced hard landing in its young VC industry due to dotcom bubble burst and came with huge casualties. It took the VC community 3 years to recover. Fast Growth: 2002 present Although initial government-backed investment operations generally failed, there has been resurgence in venture capital activity since Chinas admission to the WTO (Kenny, Han and Tanaka 2002). Capital available for investment in Mainland China keeps a steady growth trend from 2002. The capital size was increased to US$21.32B by 2007 from US$10.50B in 2002. The average compound annual growth rate (CAGR) reaches 15.2%. Venture capital investment grew rapidly from $480 million in 2002 to more than $3,247 million in 2007, invested in 440 China mainland or mainland-related enterprises (Zero2IPO 2007). According to Zero2IPO report, USD$4B VC funds were raised each year in 2005 and 2006 for China investment. But Chinas annual consumption was no more than $2B. The money chasing deal phenomenon started to emerge in China. Many foreign VC funds, especially first-time funds raised after 2005, had the pressure to pour out investment quickly to avoid US dollar depreciation against RMB and to get better deals under fierce competition. While the funding supply multiplied, quality deal flows did not increase at the same pace. Under the simple supply and demand mechanism, valuations of the China deal kept at relative high level. However, considering the fact that a big portion of funding was focusing on local value-add service segments (i.e. internet, web2.0 and broadband etc.), the issue of funds over-supply was sector specific. To get higher return under the competition, VC firms started to invest in traditional business models such as hotels, travels and fast food chains beyond their core activities such as TMT (Technology, Media and Telecom) or Internet related businesses. It was the special phenomenon happened in China now that VCs were more like PE. Legal and Regulations According to Megginson (2004), the differences in the design and the degree of development of the PE/VC industry are due to institutional factors, with the countrys legal system being paramount. Two major factors are paramount in evaluating legal system: contract law enforcement and protection of shareholder rights through effective corporate governance. Cumming and Macintosh (2002) observed that PE/VC managers in high enforcement countries had a greater tendency to invest in high-tech SMBs, exit through IPOs rather than buybacks and obtain higher returns. Cumming et al. (2004) further examined legal system effects on governance structure. Under better legal systems: the faster the origination and screening of deals; the higher the probability of syndication; less frequently funds of the same organization used to invest in a given company; the easier the board representation of investors; the lower the probability that investors required periodic cash flows prior to exit; and the higher the probability of investment in high-tech companies. Lerner and Schoar (2005) show that in a bad legal environment, PE/VC managers tend to buy controlling stakes, leaving the entrepreneurial team with weaker incentives. Interestingly, valuations tend be positively correlated with the quality of the legal environment. Kaplan et al. (2003) go deeper into the contractual aspects and found that rights over cash flows, liquidation and control, as well as board participation vary according to the quality of the legal system, the accounting standards and investor protection across countries. However, more sophisticated PE/VC managers tend to operate in the U.S. style irrespective of local institutional concerns. The authors show that managers operating with convertible preferred stocks are less prone to failure (as measured by survivorship rate). The results suggest that the U.S. contractual style can be efficient in different institutional environments. Bottazzi et al. (2005) corroborate some of the previous results and obtain further evidence on the home-country effect (PE/VC managers operating abroad tend to maintain the investment style used at home). This is observed in managers based in both good and bad legal environments. The Chinese regulations governing foreign venture capital investment are chaotic and rapidly changing. In 2005, Chinese authorities issued new guidelines (effective in 2006) intending to foster domestic venture capital firms. There is no specific regulation to monitor and stimulate the VC activities in China. The new guidelines recommended that local governments provide financing assistance, favorable tax treatment, and direct investment in Chinese venture capital firms. They also provide less stringent capitalization, investment amount, investor qualification and regulatory requirements than those applicable to FICVEs (Guerrera, Yee and Yeh, 2005). FIVCEs instead are governed by 2003 regulations that include high investment and qualification thresholds, government approval requirements, and strict foreign exchange limitations on the ability to remit profits and dividends back to the investor (Hoo, et al 2005a). Substantial legal and de facto restraints on the ability of FIVCEs to access the stock markets in China and overseas for IPO listings make exit strategies extremely difficult. For these reasons, foreign venture capital firms investing in China usually do not use FIVCEs but rely on offshore holding companies created to receive their investments. Foreign venture capital firms (most of which are U.S. based) investing in China generally have done so through the restructuring of Chinese companies into offshore investment vehicles. These enable an easier exit from investments either by selling shares on international stock markets or through a trade sale to another foreign buyer. In January of 2005, Chinese authorities brought these transactions to a virtual standstill, however, with the issuance of new regulations preventing any onshore resident from establishing, controlling or owning shares in an offshore company without the approval of the Government, either directly or indirectly. The regulations were intended to stop managers of SOEs receiving venture capital investments from stripping state assets and selling them cheaply to overseas companies, and to preclude domestic companies from using the overseas vehicles to gain foreign investor tax exemption status. However, they choked off legitimate transactions as well. There were no government approvals of offshore investment transactions in 2005. With only limited exceptions for transactions in process, foreign venture capital financing through offshore investment vehicles screeched to a halt in 2005 (Borrell and Jerry, 2005). Then, in November of 2005, the Chinese authorities issued superseding regulations. These require registration of offshore investment vehicles with the State Administration of Foreign Exchange (SAFE), but do not require the agencys approval of the transaction. They also require repatriation of all distributions of income from the investment within a fixed time frame. Like the previous regulations, the new ones do not describe specifically the registration process, the procedures involved, the scope of review nor the time required for completion, creating substantial uncertainty for foreign venture capital investors (Hoo, et al 2005b). Despite this changing regulatory landscape, many U.S. based venture capital firms have active plans for substantial investments in 2006 spurred by Chinas high growth potential, the success of recent venture-backed startups on the NASDAQ including Baidu.com and China Medical Technologies and by pent up demand after the 2005 halt in new investments (Borrell, Jerry and Aragon 2005). Hidden risk and solutions Lagging legislation and inexplicit policies in China created many uncertainties and entry barriers for foreign VCs. Below are summary of the critical problems: Chinas lawmaking on VC investment remains stagnant Existing laws such as Corporation Law, Joint Venture Law, Patent Law, etc., in many aspects even contradict VC investment. Does VC investment count as foreign investment? What status and treatment should it enjoy? The concerned authorities cannot provide clear answers to these questions. Its not clear that the amount of shares that foreign venture capital is allowed to hold when partnering with Chinese enterprises, and the way foreigners to remit in/out of foreign exchange are poorly defined. There are three available approaches for foreign venture capital firms to enter China venture capital market legally. Establishing offshore venture capital fund focusing on China Establishing a foreign invested VC firm in China (Joint VC with local player/Wholly Owned Foreign firm) as a legal person entity Establishing a foreign invested VC firm in China (Joint VC with local player/Wholly Owned Foreign firm) as a non-legal person entity To avoid the legal and regulation barriers, foreign venture capital funds usually takes the offshore investment route. Foreign VCs will use offshore USD fund to invest into China deals offshore holding entities with all equity activities happening outside of Chinese jurisdiction. The distinction of USD offshore holding investment and RMB local entity investment is a particular phenomenon in China. Offshore holding arrangement is a preferred structure for Chinese entrepreneurs and VCs as it provides a feasible and practical route for funding, divestment and all equity events. Its advantage and attractiveness to Chinese entrepreneurs and VC communities: Go away from laws and regulations in China. Many of them are not friendly to venture activities, such as lack of preferred shares, stock options limitation, double tax etc. Bypassing capital account control on foreign exchange. More flexible and usually profitable divestment options by overseas IPO, MA or trade sales. Offshore route investment involves the following steps: The Chinese founders set up an offshore holding company in Cayman Island or BVI with the shareholding structure and management control mirroring those of their local company in China. With kind of swap scheme, transferring the equity they hold in the Chinese local company to the offshore holding. This will typically convert the local company into a WFOE (Wholly Foreign Owned Enterprise). The offshore holding company will then be the vehicle seeking VC investment, future funding as well as for listing or be merged. All equity events happen in offshore. Companies funding and IPO proceeds will be kept offshore, and remit into China as and when operation required. Chinese founders assets, rights and proceeds stay offshore. The whole exercise is carried out essentially with an IPO at an overseas stock exchange, such as NASTAQ or Hong Kong Stock Exchange in vision. (The concept and process is visualized in chart 5.) Chart 5 Foreign VC Offshore Investment Process Source: A legal perspective on Chinas venture capital rush, Mar 2006 Restrictions in Chinas corporate regulations and limitations at the domestic capital markets explain foreign VCs preference in taking offshore route to organize their China investment. VC investors rely normally on preferred stocks or convertible preferred stock to secure a preferential return. Chinese corporate regulations allow only one class of common stock for a FIVCE with investment in a Chinese portfolio company. Notably, local VC firms would have the possibility to arrange preferred stock scheme with their investee company according to a newly issued charter regulation applicable to domestic VC firms. This gives rise to concern on the principle of national treatment under WTO law. Moreover, China domestic stock market does not provide a ready access for venture-backed companies. The conditions for listing at Shanghai or Shenzhen main-board market are too stringent for high-tech start-up companies. Even if listing conditions could be met, the queue in the pipeline waiting for a listing window is at the moment frustrating. In fact, the two domestic stock exchanges have halted the IPO since two years in the call for addressing the notorious overhang of nontransferable legal person shares. The undergoing endeavor is focusing on floating all stock legal person shares. Since the value of stock legal person shares is roughly twice of those trading in the stock exchange, full floating of legal person shares at stock is imposing acute challenge on the market place. This would mean that the suspension on IPO of new shares would be expected for a rather extended term. By leveraging on an offshore holding structure, foreign VCs could take advantage of the corporate governance in a jurisdiction where they feel most comfortable and bypass the restrictions under Chinese corporate law. VCs could take the