Venture capitalists see China's slowing growth as an opportunity to increase investment, mainly in consumer-oriented sectors, industry insiders said during a forum yesterday.

The hot topics were investments in food chains, health care, children's products and online games, investors said during the Piper Jaffray & ChinaVenture Investment Conference 2008.

"China's slowing economy is just what I hope for (as a member of the venture-capital industry)," said Jenny Lee, the managing director of Granite Global Ventures, which manages three funds valued at US$1 billion.

GGV would "greatly increase" its investment if China's growth in gross domestic product slows this year, said Lee, one of the conference's panelists.

China's GDP growth rate is expected to drop to about eight percent in 2008 from 11.4 percent last year.

However, spending by China's middle class will lift to a record high, which will boost the consumer market, panelists said.

Middle-class households, earning between US$3,125 and US$5,000 a year, will account for 66.2 percent of China's total urban families in 2015, from 39.6 percent in 2005, according to McKinsey and the National Bureau of Statistics.

The rising middle class is a potential catalyst to fuel the consumer market, based on China's huge population, according to Jay Chen, partner of a Softbank fund of US$100 million in the Chinese and Indian markets.

"Lots of investment opportunities are unique to China, such as Sichuan-style restaurants, massage parlors and online games, said Michael Chow, managing director of JAFCO.

VC investment in China reached US$3.24 billion in 2007, an 82.7-percent increase from the previous year, with most going to the broader information technology sector.

(Shanghai Daily March 12, 2008)