However, the most valuable assets of hi-tech enterprises are often intangible. As such, software enterprises find it very difficult to obtain financial support from banks. Issuing bonds is another major channel for raising capital. In China, however, only large enterprises are allowed to issue shares and bonds. Software enterprises are usually relatively small in scale and therefore not eligible for raising funds through issuance of shares or bonds.
Venture capital is a brand new concept in China.
As the venture capital market is still in its formative stage, China lacks the relevant management experience and regulatory framework. So far, the venture capital obtained by mainland enterprises has entirely come from offshore sources, notably Hong Kong. After China joins the WTO, the demand for capital by mainland software enterprises will rise sharply. Opportunities for raising funds in Hong Kong's capital market will also increase significantly. One of the pledges made by China in its WTO bid is to strengthen IPR protection, which is a common obligation of all WTO members.