How did people make money in China in the past 30 years?
It all started since 1978 the first reform – Deng Xiao Ping opens China. The first movers that made money in China are multinational companies and few private equity firms. Before that, everything is state owned and the whole economy is state planned. The idea of “shareholder” and “privatization” started to build. In 1990, the Shanghai Stock Exchange – the first stock exchange in China, was founded. The earlier movers made the first bucket of gold in domestic IPOs. Stock market started to get a lot attention. In mid 90s, first returnees came back to China and started a lot business. As the internet bubble rising, there were quite some big IPOs of Chinese companies listed in NASDAQ including Sina, Sohu and UTStarcom in 2000, followed later by Baidu 2005 and so on. At the same time more and more domestic private equity firms are founded in China, including the well-known names such as buyout & growth – CDH, HONY Capital, CITIC Capital and Capital Today; VC – GSR, Northern Light, Steamboat and so on. Meanwhile, foreign mega PE firms were also busy setting up China business including early movers such as Carlye, KPCB and Warburg Pincus. They all try to take advantage of and make money from the fast growth of China’s economy with more than 9% growth on average that 10-20 year period, until now. To summary, people made money in China so far in two big developments 1) 1980 – 1995, the founding and growing of China’s domestic equity market and the idea of “privatization” and “shareholder”; 2) 1995 – now, private equity to take advantage of the fast economy growth and go public abroad.
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