China welcomes Kremlin-backed hi-tech investment fund to Shenzhen
- Fund aims to encourage combination of Russian software and Chinese hardware from tech hub base
- Trade war brings Beijing and Moscow closer together
China has rolled out the red carpet for a Kremlin-backed private equity fund ready to invest in its hi-tech manufacturing sector, just as foreign investment could help to offset the impact of the trade war with the United States.
Russia’s Da Vinci Capital Management – with US$500 million in capital – has established a 600 million yuan (US$86 million) fund with state-owned China Electronics Shenzhen, in the southern province of Guangdong. The aim is to invest in firms combining Russian software and Chinese hardware.
Shenzhen is well known for its world-class electronics manufacturing industry that includes telecommunications equipment maker Huawei Technologies and smartphone and electronics manufacturer ZTE.
The private equity fund turned to Shenzhen after apparently getting the cold shoulder from neighbouring Hong Kong.
It was a different story over the border, with a 150 million yuan commitment from China Electronics Shenzhen – still under negotiation – and the promise of rent-free office space in a hi-tech development zone from the local government.
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A quarter of the financing for the new private equity pool – known as China-Russia INNO Funds – will come from the Russian government’s sovereign wealth fund with the rest to be attracted from Chinese and international investors.