CHINA'S austerity programme offers opportunities for venture capital managers because of strong demand for funds, according to investment analysts. According to Asian Venture Capital Journal, the size of China venture capital funds, which invest in long-term projects of unlisted companies, will amount to US$1 billion, up 67 per cent over the past year. ''There is increasing awareness among United States and European institutions about the economic growth in China and Asia, while two years ago only a handful of institutions were seeking to place money in China venture capital funds. The degree of interests has increased greatly,'' said Robert Lewis, director of AVCJ Holdings. Between 1989 and 1991, China venture capital managers raised US$180 million while $600 million was raised last year. More than 35 China venture capital funds have been established. ''Venture capital fund managers in Hong Kong are very optimistic about the prospects of investment in China. ''In the absence of bank credits, the current anti-inflationary policy has prompted Chinese companies to be more open to direct equity investment,'' said Mr Lewis. Kurtis Chan Sui-lung, associate director of Kleinwort Benson, said: ''There will be a lot of bargain buys in China now.'' However, another China fund manager added: ''There will be some good bargains, but not a lot. Many foreign institutions have their eyes on China and well-established mainland companies have learned to be selective.'' In many China funds, less than 25 per cent of their investment portfolio are for venture capital. Mr Chan said that China's B-share market, available for foreigners only, was in a primitive stage. The transparency of the listed companies' structure was low. There was a wider variety of unlisted companies to invest in, he said. ''We can look at many industries.'' All investors in venture capital funds are institutions. The minimum investment size is $100,000 to $200,000. The funds are invested in small and medium size unlisted companies, mainly state-owned enterprises. The average size of each investment amounts to $3 million. In general, the fund holds 25 to 30 per cent ownership of the company and the fund manager always participates in the management. It maintains the investment for an average of three to five years and expects an annual return of between 25 and 40 per cent. Lack of sophisticated information, accounting and financial systems appear to be the biggest hurdle faced by foreign funds. To seek quality buys, many fund managers are still holding cash in hand. AVCJ will launch The Guide to Venture Capital in Asia on Tuesday. Each costs HK$850. It will provide information on venture capital data and analysis.