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GGV Capital Managing Partner Hans Tung. Photo via Getty.

GGV’s ByteDance Sale Won’t Solve Its China Dilemma

Photo: GGV Capital Managing Partner Hans Tung. Photo via Getty.

For a long time the debate around American venture capital investment in China has centered on Sequoia Capital, the blue-chip VC firm that’s earned billions of dollars from its overseas investments. But since Sequoia announced in June that it would split from its Chinese counterpart, the spotlight has expanded to a cohort of smaller firms that have invested heavily in China. The most notable is GGV Capital, based in Menlo Park, Calif.

The pressure on GGV, which has backed TikTok owner ByteDance, ride-hailing company Didi Chuxing and dozens of smaller Chinese startups, to separate from its China investment practice is rising. Last month, Congress’ Select Committee on the Chinese Communist Party sent letters to a handful of VC firms, including GGV, that noted its “serious concern” with their investments in Chinese AI startups. It said it was beginning an investigation into those activities. Then on Wednesday, President Joe Biden announced an executive order limiting U.S. venture and other investments in semiconductors, quantum computing and artificial intelligence technology in China. 

GGV has two offices in China, in Beijing and Shanghai, and has been investing in the country since the early 2000s. It has yet to announce any plans that might relieve pressure from Washington, such as creating a separate China investment practice or ceasing investments in Chinese AI startups. It may have been waiting for larger firms, like Sequoia, to make their move. In the meantime, it’s been backing away from at least one investment.

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