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The best predictor of successful investment in Vietnamese business is the motivation of the owner of the business, said Chris Freund, founder and managing director of Mekong Capital, which invests in three to four companies there a year. “We really try to understand their motivations—what makes them happy and what they’re really trying to achieve,” Freund told the 2005 Chicago Asia-Pacific Business Conference during the panel “Venture Capital and Private Equity in Asia: The Bandwagon to Wealth” on October 1 at Gleacher Center. “Once we understand that, it’s a good predictor of what the relationship will be like in the future.”
David Posner, founder and managing principal of Cambridge Capital, stressed the importance of the emergence of one world economy, but warned investors against viewing Asia a single economy. “People take a lot of offense to looking at Asia as one block,” Posner said. “ Asia is separate countries. However, we’re all interlinked.” With this global economy in mind, Cambridge utilizes outsourcing and offshoring to create significant opportunities for strong financial returns in Asia, he said. “There are many things being made or services being done in Asia,” Posner said. “People don’t know that 15 percent of all U.S. tax returns were done in India last year. You send it to your local guy and he outsources it without your knowing it.”
The domestic markets in China have been “completely broken” since 2001, said Jocelyn Choi, senior vice president of equity capital markets for Lehman Brothers. “There’s been a complete loss of credibility, both from the issuer’s perspective and the investor’s perspective,” Choi said. She estimated that 90 percent of all Chinese companies that went public have lost value, on average some 70 percent of the initial investment. “There really isn’t much regulation,” Choi said. “There’s rampant fraud and illiquidity is another major problem there.”
—Phil Rockrohr
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