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China, “the market of 21st century”, is a market that none of the international companies can ignore. With the enormous market scale and the nascent nature of the market, the IT market in China has highly attracted global investors’ attentions. In addition, domestic source of investment also is important components for growth in IT industry.

Government spending on internet infrastructure has stimulated Software production. For year 2002, China's entry of WTO has been an important factor for the unprecedented increase in foreign direct investment. WTO agreement opens up China's telecommunication service market.

Domestic Investment ²⁶

According to the information released by Ministry of Information Industry (MII) in 2001, China will spend one trillion yuan (US$ 120 billion) by 2005 on its information industry. In which, US$ 60 billion will go for telecommunications, US$ 6 billion for post service, and US$ 50 billion for electronic information technology.

Part of such investment is designed to propel the development of electronic government. China's central government will invest at least1 billion yuan (US$ 120 million) on new hardware and software infrastructure for all levels of government over the next 5 years. The total expenditure is expected to create an E-government market in China worth up to 200 billion yuan (US$ 24 billion).

Foreign Investment ²⁷

During the first eight months in 2002, the IT sector in China attracted more than US$5.1 billion of foreign investment, 15 percent of the country's total; in the first half of this year, an average of US$160 of foreign direct investment (FDI) entered China every day, according to official statistics. Toshiba has pitched in to the IT sector, having already invested in home appliances, electromechanical products and energy. So far, nearly 400 of the world's top 500 enterprises have invested more than 2,000 projects in China with over 100 research and development centers. China's IT output soared by an average annual rate of 20 percent in the last decade, three times the gross domestic product growth, and is expected to exceed 1.6 trillion yuan (US$192.7 bilious) this year.

Venture Capital

The practice of venture capital financing in China is still in its infant stage. Sino-Foreign joint venture enterprises and the subsidiaries set up by foreign companies in China will be cable to apply for to be listed on China's Growth Enterprises Market (GEM), or second board market, in the future.

Chinese government, companies and academic institutions have realized the importance and necessity of China to create a venture industry. However, China's existing legal system is unable to support such demanding. The major obstacles include,

IT Stock Market²⁸

China has set up its two main stock markets in Shanghai and Shenzhen in 1991 and 1992 respectively. In 1998, a regulatory body- the China Securities Regulatory Committee (CSRC) was patterned after the Securities & Exchanges Commission in New York.

Oversea Listing

	Company	Listed Date
New York Stock Exchange	China Mobile (Hong Kong) Ltd. ( CHL)	10/22/1997
	China Telecom Corporation Limited ( CHA)	11/14/2002
	China Unicom ( CHU )	06/21/2000
Nasdaq Stock Exchange	Netease.com, Inc. (NTES)	06/30/2000
	Sina.com (SINA)	04/13/2000
	China.com corporation (CHINA)	07/13/1999
	Sohu.com Inc. (SOHU)	07/2000

Domestic Listing

Year 2001	No. of Listed companies	Turnover (billion USD)	Capital Raised (100 million USD)
Shanghai Stock Exchange Market	646	325	46
Shenzhen Stock Exchange Market	508	203	28

The author’s note: both two stock exchange markets are active in technology IPOs, not only the above mentioned big portals and big telecommunication companies are listed in domestic market, but also a lot of small and medium sized high-tech companies are public.