Overview

Management

The business of A&J Venture Capital Group is focusing 3 directions. The total or partial takeover of Chinese SME´s with the scope of restructuring and improving their performance through the thorough application of modern management techniques. This is achieved through A&J Venture Capital Groups´ own staff or through the development of the subsidiaries existent staff. A dynamically tailored package of activities will lead the subsidiaries to a development stage where they are viable spin off candidates for public listing. Second direction is the service provider for established, fast growing and leading Chinese Companies. A&J Venture Capital Group is providing all services for going public such as locating and offering shells, lead through process of reverse merger with legal process, introduce investors to provide funding to public company etc. A&J is holding interests between 15-49% of the listed company for their services.

Considering the mostly archaic management structures of the Chinese SME they carry a tremendous potential for efficiency improvements although it is not easy to set this potential free through change. This archaic management structure is resilient and extremely resistant to change.

Guanxi is a word, which has made its way into the vocabulary of all persons doing business with or being somehow related to China. It means a more or less visible network of mutual support between the members of this network. Every Chinese SME has two of these network structures. One is an internalized network of support, allegiances, and obligations within key figures in company. This internalized network often conflicts with the interest and goals of the company and needs to be marginalized to allow lean and efficient management structures to align with the companies goals. The second network is an external network that represents resources and opportunities for the company.

The implementation of the above mentioned activities requires a powerful lever into the Chinese SME´s which is represented by the Chinese financial system. In China two parallel financial systems exist. The first is the well known formerly state owned system of banks. This System is available merely the to large companies which in most cases are themselves formerly state owned. The other financial system is a locally operating network of private lenders and represents the only source of financing to nearly all Chinese SME.

These private lenders execute tremendous economic and psychological pressure on their “customers”. Monthly interest rates of 10%-25% are not uncommon. Substituting those sources of private financing with external “clean” investments is the leverage necessary to be able to penetrate deeply into the processes of these enterprises thereby setting free potential increases in efficiency.

After maturing the subsidiaries into profitable transparent enterprises with a presentable corporate governance system they will become spin offs and listed on the stock market.