Page 119 - How China Is Winning the Tech Race

But there has been a clear symbolic shift from the early 1990s, when the
pioneers of Chinese venture capital sweated to earn back money in
investments troubled by corruption, fraud, and financial disputes. Most of
those investments were in ill-fated joint ventures or state-owned enterprises,
which then were the only pathway to China.

China pipeline

Two prominent early adventurers into China—Ta-lin Hsu of H&Q Asia
Pacific and Lip-Bu Tan of Walden International—offered a welcome mat to
China for their Sand Hill Road colleagues to get comfortable with the Middle
Kingdom. At home with the customs, language, and culture on both sides of
the Pacific, the hard-driving but charming Hsu and the smooth-as-silk
mannerly Tan shuttled from San Francisco to Beijing and beyond
painstakingly doing deals, earning 1K frequent-flier status, and becoming
regular guests in the United Airlines Red Carpet Club at gateway cities.
Tan, a Malaysian-Chinese Singapore native, started Walden in 1987 to
invest in cross-border Asian-U.S. deals after his doctoral studies in nuclear
engineering at the Massachusetts Institute of Technology were derailed by the
Three Mile Island nuclear leak. He raised a China fund of $100 million in
1994 that barely eked out $120 million, largely because of blatant corruption
that led him to walk away from deals and sell shares back to management
when disputes erupted over bookkeeping or accounting. In 2000, he landed
his first in a string of China hits when the Chinese Internet portal Sina.com
went public on Nasdaq.
The Mainland China-born Hsu grew up in Taiwan, got his Ph.D. in elec-
trical engineering from the University of California at Berkeley, and founded
H&Q Asia Pacific in 1986 to invest in Asia and the United States after a 12-
year tenure as a researcher at IBM. Hsu helped jump-start Taiwan’s high-tech
industry and brought Starbucks to China, recently selling the Beijing and
Tianjin franchise for a “very good” return to the Seattle-based parent company.
But Hsu remembers all too well the protracted legal battle he fought along
with HSBC Holdings and New York Life Insurance over a land title in an expa-
triate housing and golf course development project called Shanghai Links, a $50
million investment in 1997. Nearly 10 years later, in 2006, after an award of

Silicon V alley’ s T ech Route to China 93