In early July, Passion Venture Capital (PVC), a Singapore based fund management company and its China entity MeiShi (梅石) hosted a biotech business event in Haikou City, capital of Hainan Province, connecting four Canadian biotech companies with Chinese counterparts to explore partnerships, investments, and market entry opportunities in China's rapidly growing biotech sectors in the Hainan Free Trade Port.

In his exclusive interview with Hainan International Media Center, Steve Zeng, CEO of PVC China, shared what is behind PVC's decision to choose Hainan as a hub to connect international biotech companies with China, and the company's vision for bringing start-ups from more countries and sectors to Hainan.

Steve Zeng, CEO of PVC China (Photo by Chen Haowen, HIMC）

Intro to PVC and Meishi

"As a VCC (Variable Capital Company) holder in Singapore, PVC registered its company in China under a new name, launching incubation and PE (private equity) services. We chose the words Mei (梅: plum blossom) and Shi (石: stone or mountain) in Mandarin Chinese because of their highly positive connotations of 'long-standing' and 'good luck'. Meishi is currently in the process of obtaining QFLP (Qualified Foreign Limited Partner) and QDLP (Qualified Domestic Limited Partner) licenses in China, with the aim of bringing more international companies into the China market and helping the businesses to attract more capital in the future."

Impressions of Haikou and Hainan

"The founder of PVC, Mr. Goh, has visited Hainan several times already. But for me personally, it's the first time because most of my daily work is done either in Beijing or in Singapore. I am impressed by the beautiful coastal scenery and modern-looking skyline of Haikou. Also, as the capital of Hainan Province, where the Hainan Free Trade Port is being developed, I have heard there are preferential policies in Haikou and will be more in the coming years, so I think it could be a good starting point for international businesses like us looking for an entry into China."

How can the Hainan Free Trade Port boost cross-border commerce between China and ASEAN countries?

"I've been focused on the development of cross-border transactions since my graduation from university, and to be honest, due to geopolitical and other factors, the overall situation today is not as good as it was ten or fifteen years ago, and currently it's not that easy for Western capital to connect with companies in China. But as a fund management company in Singapore, PVC has the advantage of knowing China better, so we want to create a 'highway' between China and the West. So we are keeping an eye on the development of free trade zones and related policies in China, and the Hainan Free Trade Port is a place you can't ignore. We do hope that Hainan, and especially Haikou, can become a free trade zone of broader international influence like Singapore, Dubai, and China's Hong Kong, where westerners can keep their work and lifestyle as much the same as possible. In terms of capital inflow and outflow, which is our specialty, the requirements so far are still very strict, but I think we can do more since the development of the Hainan Free Trade Port is coming into a newphase."

Why are all the start-ups brought for the event in Haikou Canadian biotech start-ups?

"PVC has been working with Canadian biotech companies for many years, and we know the emphasis that the Canadian government puts on this sector. Previously, the US market is where they put most of the development and maintenance effort, but China as well as Asia market is now a new destination with increasing attractiveness, so PVC is working as a bridge or highway between the two sides. As for the choice of Hainan, in addition to the preferential policy factor mentioned before, the approval process for international biotech companies is much easier compared to other places in China like Beijing and Shanghai, so the start-ups take a shorter period of time to enter the market. Also Hainan's advantages in terms of needed materials, supply chains, and convenient transportation are important for our biotech partners. In addition, we are seeking opportunities in key sectors including automation, clean (energy) tech, and AI in Hainan, and we’ve seen some companies in Hainan growing from tiny companies to being listed on the Hong Kong Stock Exchange, so we look forward to setting up partnerships with them and maybe we will do the same one day."

How will PVC help start-ups in Hainan reach international investors and markets?

"To connect local start-ups in Hainan and China with international investors more effectively, the best solution is to bring the investors here, and that is exactly what PVC has been trying to do. PVC's license in Singapore is the first step, and now we are applying for fund management licenses like QFLP that are needed to fully deploy the fund in Hainan. PVC has already raised a quota of a 200 million USD QFLP fund, and the approval at the local level of Hainan is finished, so hopefully we can obtain approval from China’s central authorities by the end of this year."

What are PVC’s expectations for the company’s development in Hainan over the next 3 to 5 years?

"After obtaining all the needed licenses, as an international PE (private equity) firm, the key task will be bringing international companies and capital into Hainan. In the biotech sector, we want to assist our partnered start-ups in connecting with locally based pharmaceutical companies to form joint ventures here, which will allow us to attract more investment from Singapore, Canada, and other western countries. Meanwhile, we plan to make full use of local production and distribution capacity. Also, our fund can support the development of these joint ventures."

How will the island-wide Special Customs Operations enhance the Hainan Free Trade Port’s attractiveness to foreign business and capital, against the current backdrop of rising bilateralism and protectionism?

"Compared to other places in China, Hainan FTP will provide international business and investors with the flexibility and convenience they need to enter the China market, and assist in the expansion of their scale of operation locally at a lower expense. For example, the four Canadian biotech start-ups at this event have high expectations of the market in China, which is larger than the market in Canada, and Hainan is where they can set up a base to enter the larger market with greater freedom thanks to the policies here, and this is what the other international business and investors need as well. Meanwhile, what matters to PVC and the start-ups is making full use of Hainan as a hub to contact influential potential partners. This is vital and helpful for the incubation of startup companies."