Jerusalem Venture Partners (JVP), a leading Israeli venture capital (VC) firm, will soon open its first office in China, a significant move to plug into the fledgling but promising Chinese VC market, company sources have revealed.

"We already had an informal presence in Beijing," said Erel Margalit, founder of the company, "but we will soon officially set up the Beijing office."

The 11-year-old company is now recruiting local staff to help establish a presence among hundreds of local players.

The international venture capital company, which has offices in Israel, the United States, the United Kingdom and Japan, provides startup capital to emerging and promising technology companies.

"We are committed to doing something here in China, primarily by bringing core technologies from Israel and the United States, in close co-operation with the local industry," said Margalit.

China's private high-tech companies are in great need of start-up funds, as they always find it difficult to get bank loans. A booming high-tech and private sector in China could present valuable business opportunities for VC firms like JVP.

Margalit said he expected semiconductor and mobile services to be hot sectors, given growth rate and business opportunities.

He also named online gaming services as a profitable area that JVP plans to invest in.

"The Chinese online gaming market is ahead even of the United States in terms of scale and number of players," Margalit said.

"We are going to try and bring some advanced technologies to China's gaming industry."

Margalit is also aware of the challenges facing newcomers. JVP intends to get acquainted with the Chinese market by cooperating with local VCs, he said.

"We have been in touch regularly with a few local firms that know the market well," he said.

"At the very beginning, we are happy to be a follower and bring something to the table for the technology markets we are operating in Israel and the United States," Margalit said.

The company has already had business experience with Chinese firms.

JVP invested in Beijing-based Up Technologies, a small communication services company, a year and a half ago.

But Margalit declined to reveal the amount of the investment.

Margalit also said the biggest factor that could affect growing business in China would be the country's implementation of intellectual property rights protection.

But he pointed out that the situation is improving, as many Chinese firms have realized the importance of intellectual property rights protection during their efforts to penetrate the global markets.

"Companies like Huawei Technologies and Haier are now international players," Margalit said. "They are clear on the fact that they should have their own intellectual properties to meet international rules," he said.

(China Daily July 2, 2004)