KEY POINTS:
One of China's richest venture capitalists wants to invest in New Zealand's agriculture industry through a new US$300 million ($590 million) private equity fund he is setting up.
Chaoyong Wang, chairman and chief executive of China Equity, is in New Zealand this week as part of the Louis
Vuitton Pacific Series.
The founder of China Team is estimated to have a wealth of US$160 million and thought to be the fourth-richest venture capitalist in China.
Speaking exclusively to the Business Herald, Wang said he did not have any business interests in New Zealand yet. "But we are starting a private equity agriculture fund and will be looking for agricultural businesses in New Zealand and Australia."
Wang's company China Equity, which he founded 10 years ago, already has a natural resources fund which invests in mining and cattle farms in Australia and some agriculture business in Brazil.
He hopes to raise US$300 million to US$500 million in the next few months for the new agriculture private equity fund.
While it would have a global focus, Wang said he was keen to invest in Australasia. "New Zealand and Australia would be very important markets."
He believes China has a lot to learn from New Zealand's agricultural industry. "In our mind there is a lot of good sense in China agricultural businesses learning from New Zealand about how to upgrade their management systems and product quality."
He said Fonterra's involvement in the baby milk scandal had not deterred his plans or given the company or New Zealand a negative image in China.
"People in China appreciate Fonterra being the whistleblower to make this poison milk case public."
He said the situation was a wake-up call for the industry and for corporates to be more responsible.
"Fonterra sacrificed it's own benefit for the benefit of the people.
"People in China will benefit profoundly from what they have done."
China is a big consumption market and people are very keen on importing milk, he said.
The move into agriculture would be a change for Wang, whose companies currently focus on investing in green technology, healthcare and high growth service industry including retail chains and restaurants.
"That's where we see good demand and dynamics."
He says the world economic troubles have had the most effect on China's export sector.
The sharemarket had dropped dramatically and the real estate sector was also down. But service sectors of retail and food and beverage were still seeing healthy growth, buoyed by the Government's stimulus packages.
Wang said the world recession had pros and cons for his company. One positive was the drop in value of target companies.
"Because of the Government's economic stimulus plan, the economic growth will not be down too much in certain sectors such as infrastructure, new energy, healthcare, retail and also new technology.
"But we are concerned about the temporary shut-down of IPOs [initial public offerings]."
He said the window for exiting businesses had been very slow to come back.
Compared to the Asian crisis in 1997 Wang said the current recession was much tougher for China as it was now much more connected to the rest of the world.
He said confidence was as importance as cash in the current market conditions.
"People are quite encouraged by what the Government is trying to do. But of course there are many challenges, especially in the export sector where there is a lot of unemployment.
He sees the recession as another good opportunity to extend China's embrace with the world economy.
"Thirty years ago when China opened up it had great development. This is another opportunity for China to enter the world market and receive good quality investment which helps businesses to upgrade themselves."
Chaoyong Wang
* Chief executive of China Equity.
* 40 years old
* Estimated wealth of US$160 million ($315 million)
* Ranked 727 on China's Rich List last year (according to the Huron Report)
* Fourth richest venture capitalist
* Went to university in America
* Worked for Chase, Standard & Poor's and Morgan Stanley before setting up his own company 10 years ago
* Founder of China Team, an America's Cup racing team
