Hefei Sample Of Government "Venture Capital": Leading Investment In Emerging Industries And Optimizing Innovation Capital

In June this year, a story about Hefei municipal government being the best VC shot up on social network.

From BOE in 2007 to Changxin / Zhaoyi innovation in 2011, and then to the landing of Weilai automobile and Volkswagen new energy sectors in 2019, the once largest "county" in China not only ranks in the new front line, but also becomes the "China's top VC" talked about by investors.

From the perspective of industrial cluster construction, Hefei's new display devices, integrated circuits and artificial intelligence have been selected into the list of the first batch of national strategic emerging industrial clusters announced by the national development and Reform Commission.

Behind all the praise and excitement, some people attributed the result to the investment bank's investment attraction ability, and others pointed out the debt risk brought by the large-scale investment of government financial funds into the industry. In addition, we can also use it as a path for local governments to introduce capital and resources into the implementation of advanced productivity.

"Without a foundation, it is difficult to develop new industries completely through marketization. Especially when the target needs to be reinvested, it is difficult for market-oriented funds to participate in it for the sake of short-term return. " A partner of the Yangtze River Delta government guidance fund said.

Invest in new industries

Hefei has become a venture capital story because of its high return on government investment.

In the paragraph forwarded by Dan bin, a private-equity tycoon, in 2007, the investment in BOE made more than 10 billion yuan. In 2011 (Note: actually 2016), Changxin / Zhaoyi innovation and listing were expected to float more than 100 billion yuan. After the investment came in 2019, the new energy vehicle sector of Volkswagen was settled.

In fact, the success of Hefei model in the past 10 years is not only the determination of Hefei government's capital investment, but also its initiative in supporting industrial services. As the commentator said, "only by knowing business better than businessmen can they attract investment from businessmen."

According to the enterprise biography "Guangbian: a history of an enterprise and its industry", the selected cities of BOE 6-generation line project in 2008 were mainly located in the Yangtze River Delta, Pearl River Delta and Bohai Bay, and many cities expressed their determination to both contribute money and contribute.

When BOE executives were invited to visit Hefei, they found that the local government was ready to build land for the plant, and there were relevant alternatives. First, they were "moved by the attitude of local leaders". Then they learned that Hefei had advantages in regional geography, water and electricity supply and talent supply. In addition, the municipal Party secretary personally led the project and the mayor carried out the project promotion. Finally, BOE made up its mind to enter Hefei.

In terms of capital investment, according to the framework agreement signed in the autumn of that year, Hefei invested 6 billion yuan for the project, and promised to guarantee a minimum of 9 billion yuan in case of unsuccessful additional issuance.

Later, Weilai automobile was also popular. In February this year, Weilai automobile announced that it had signed a cooperation framework agreement with Hefei. The headquarters project of Weilai China will be settled in Hefei. The Hefei municipal government has invested more than 10 billion yuan in the project through the designated investment company and the market-oriented investors.

Looking back, in 2016, Weilai reached a cooperation with Jianghuai Automobile, a complete vehicle enterprise in Hefei, to establish a new Jianghuai Weilai factory. The establishment of China's headquarters in Hefei will continue to promote the development of Hefei's upstream and downstream automobile industry chain.

According to the official microblog of Hefei people's government, Weilai is planned to become a leading enterprise with an output value of 100 billion yuan within five years, so as to drive the development of new energy automobile industry in Hefei and even Anhui.

Industry cultivation bears fruit

In addition to BOE in the new display industry and Changxin semiconductor in the field of integrated circuits, iFLYTEK in the field of artificial intelligence has also been cultivated to promote the development of enterprises.

After BOE's settlement, it not only complements the layout of Hefei's home appliance manufacturing industry, but also drives supporting upstream enterprises to set up factories in Hefei. The Changxin wafer project managed and operated by Changxin storage is now the only DRAM project with complete technology, process and production operation team in mainland China.

The growth story of iFLYTEK in Hefei is different from that of Beijing University of finance. Now, iFLYTEK's artificial intelligence agglomeration effect has begun to show, and the key cooperation project "China sound Valley" jointly built by the Ministry of industry and information technology and Anhui Province has been settled in Hefei.

Today, these industrial giants have begun to feed back the development of local industries. In May this year, the government work report of Hefei city clearly proposed to improve the level of industrial development, including in-depth promotion of "core screen device integration" industry development, and accelerating the construction of three national war new industrial clusters of new display devices, integrated circuits and artificial intelligence.

Not only Hefei, but also "core panel integration" has become a major idea for the development of emerging industrial clusters in Anhui Province. Among them, "core" refers to chip industry, "screen" refers to flat panel display industry, "device" refers to equipment manufacturing and industrial robot industry, and "cooperation" refers to integration of artificial intelligence and manufacturing industry, corresponding to electronic information, intelligent home appliances, new energy vehicles, industrial robots and artificial Intelligent five emerging industries.

"It is difficult to create a brand-new industry through market-oriented means. Therefore, government funds are needed to accompany the growth of enterprises and industries for a relatively long time, so as to give full play to the social benefits of financial funds." The aforementioned guide fund manager told the 21st century economic report. This analysis also explains why Hefei municipal government started industrial construction in the field of new display devices, integrated circuits and artificial intelligence more than 10 years ago.

Building a new capital Highland

More than ten years later, Hefei presented the story of local government cultivating industrial clusters for the market through BOE, iFLYTEK and Changxin storage. On the other hand, the capital story of Hefei promoting industrial development through capital has just begun.

To cultivate an industry from scratch depends more on the support of government financial funds. The local government can guide the local government to participate in the construction of local industry.

According to the data of Qingke private equity, the total target scale of government guidance funds at all levels registered in Hefei exceeds 100 billion yuan. These funds were set up in 2016-2018, with an average target size of nearly 6 billion yuan. From the perspective of the whole province, the total target scale of guiding funds at all levels registered in Anhui Province has exceeded 400 billion yuan, and more than 10 guiding funds have been established every year in the past five years.

A sub fund partner of Anhui provincial government guidance fund told reporters, "Anhui takes the guidance fund as a new means of attracting investment. It is not dogmatic in terms of treaties, and can also undertake the demand of capacity transfer. This has taken into account the security of investment and the needs of industrial development, and has proved to be effective. "

For Anhui, a big province of science and technology innovation, the greatest value of the government guidance fund is to optimize the ability and mechanism of Anhui innovation capital formation. By the end of March 2020, there are 901 registered funds in Anhui Province, 214 management institutions and 416.2 billion yuan of fund scale, ranking first in the center and tenth in China.

According to the development report of industrial fund of Anhui investment group (2019) released by Anhui investment group in May this year, Anhui Investment Group initiated the establishment and management of 69 industrial funds with a subscription scale of 91.5 billion yuan, covering 14 cities in the province and 16 prefecture level cities in the province. In addition, it also participated in a number of national large funds, such as the national integrated circuit fund, the national advanced manufacturing fund, and the Yangtze River Delta collaborative advantage industry fund, to import high-end industrial resources and capital for Anhui economy.

As of this year, 23 provincial-level fund companies have been listed on the stock market, of which 23 enterprises have been listed on the stock exchange of Anhui Province. As of the end of this year, 23 enterprises in Anhui Province have been listed on the stock market, and their achievements have been approved.

In this way, a number of listed and reserved "trapezoidal legions" of Anhui capital and Anhui enterprises are forming.

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