Private equity helps boost China jobs, R&D-survey

Private equity helps boost China jobs, R&D-survey

Private equity investments in China lead to the creation of more jobs and spending on research and development than their publicly listed counterparts, a survey showed on Thursday.

Private equity has sometimes been viewed with apprehension in China, particularly when large state firms have been the targets of investments.

In a survey dating from 2002 to 2008, the European Union Chamber of Commerce in China said that the economic and social impact of private equity investments was quite positive.

Total employment at firms backed by private equity grew by 16 percent over that period, twice as much as at publicly listed companies, the EU Chamber said in a report. Salaries also grew more quickly, it said.

“Private equity’s qualitative impact on hiring and compensation is helping to move China’s economy toward greater domestic consumption and more secure social stability,” it said in a report.

Research and development spending as a percentage of revenue in PE-financed firms was more than 2.5 times that of their publicly listed peers, it added.

PE-backed firms saw a 39 percent average increase in profits over that period when compounded annually, compared with 25 percent among publicly listed companies, the Chamber said. (Reporting by Jason Subler; editing by Simon Jessop)