Zero Hedge — Beijing's Big Tech Crackdown Causes Private Deal Flow To Dry Up In August

 Buying opportunities?

The sudden evaporation of deal flow has certainly gotten the investing community's attention, but at the end of the day, China is simply too large of a market for PE firms to ignore. So few expect it to last long.

Jeffrey Lee, a partner at China-focused venture capital firm NLVC headquartered in Beijing, said robotics and manufacturing automation has been an increasingly hot sector. While more caution and strategy shifts are warranted, exiting China entirely would be out of the question, he said.

"The hard reality is that you can't find a replacement for the sheer size of the economy, the next phase of its growth and -- despite all of the criticism toward the government -- the level of institutional development, whether it's in roads or bridges, or whether it's in the banking system," Lee said. "It just doesn't exist anywhere else in the world."

VC interest in consumer-focused businesses that are bearing the brunt of Beijing's crackdown now is also unlikely to shrivel entirely.

"Ultimately there are a lot of consumers in China, and a lot of rising middle-class consumers who are willing to spend," said Joshua Chao, senior analyst at PitchBook. "There's a strong reason to say that consumer businesses are still gonna do pretty well in China.".…

This will be a blip on the screen over time. China is just getting a hand on things that were getting out of hand. The leadership has the example of the West to draw on for what happens with lax regulation, cultural decay, and unbridled accumulation at the top — social dysfunction and deterioration of cohesion, exacerbated by obscene inequality. 

China has a traditional culture, and it is not going there, much to the chagrin of the Western liberalizers, who are dismissive of the cost to society.

Zero Hedge
Beijing's Big Tech Crackdown Causes Private Deal Flow To Dry Up In August

Tyler Durden