China: 'The Best Place to Invest in the Next Five to 10 Years'

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The Carlyle Group, one of the world's largest private equity firms, has been in China for nearly a decade and has contributed to the fast-growing private equity industry in China. Why is private equity so important in China now? What are its major challenges? China Knowledge@Wharton recently interviewed David Rubenstein, co-founder and managing director of the Carlyle Group, which was established in 1987 and today manages more than $75 billion in 33 offices around the world.

China Knowledge@Wharton: Many private equity firms have their eye on China. What are the opportunities and dangers there?

Rubenstein: We are very large investors in China. We operate in Shanghai and Beijing with very large teams, all of them PRC [People's Republic of China] natives. I think the single most exciting place to invest over the next five or 10 years is China, both in buyouts and in venture capital . Venture capital is already booming. Every major venture capital firm has a China strategy. We have a very good firm in China to do these kinds of transactions. Buyouts are more complicated in China because the government doesn't want large companies being sold to foreign interests. We own a lot of companies in China but we have minority stakes in those large companies. And they have done quite well. ...