Venture capital investments in Chinese companies are growing strongly, as reported today by VentureBeat.

Having returned from the TechVentures Conference in Singapore earlier this month, I can confirm that China is a hot topic for investors. In the late 1990’s, I worked in Hong Kong as a venture capital reporter. During the height of the U.S. technology bubble, venture capital in China could mean putting $20 million into a cement factory.

While that’s changing, a closer look inside the numbers reveals that not everything has changed. A quarter of the deals are classified as “Business/Consumer/Retail,” according to the VentureOne/E&Y survey, covering things like consumer products and brick and mortar retailers. These deals don’t typically qualify as venture capital as defined in the U.S., where the term is usually reserved for earlier to mid-stage technology-related deals.

That doesn’t mean U.S. investors aren’t flocking to China for technology. Traditional Silicon Valley firms like Sequoia, Draper Fisher Jurvetson, Mayfield and NEA are all in China, either directly or through partnerships. Rumour has it that Venrock and Kleiner Perkins are also looking to make a connection in China, probably in Shanghai (though VentureBeat has checked with both firms, and they say no decision has been made).

Allen Lee, general manager for the Asian Venture Capital Journal in Hong Kong, said that the latest U.S. entrants have a different philosophy on China.

“Most of the investors in 2000 and 2001 were winding up their funds and looking for diversification,” he said. “They were throwing up a Hail Mary and hoping they would get a good return.” These days, he said, U.S. venture firms are stressing local presence and using local talent to source deals.

Much of the talk at TechVentures centered on the rising valuations of Chinese startups. The country is maturing to the point where just sourcing deals is no longer enough. VC’s and private equity firms are increasingly bumping into each other and competing for the same deals.

So all of this activity brings up the question, “Is there a China bubble?”

“In this particular cycle, there is a lot of money rushing in and some guys cutting in on deals,” said Joel Kellman, managing director of Granite Global Ventures, referring to how investors are swooping in at the last minute to snatch deals from VC firms that have worked on deals from the beginning. Granite Global has offices in Menlo Park and Shanghai and has backed the likes of Alibaba in China. “When you see things like that you start to worry.”

He’s not taking any chances though, remembering that there was plenty of money to be made in the U.S. bubble.

“In the nineties, I remember Cisco when the price was $8, then $10, then $20 and I thought that it was overvalued so I sold,” he said. “Then it went to $35 and I said ‘I’m not going to fight this anymore.’ So I bought in and it went to $80.”

In a land of 1.3 billion increasingly tech-hungry consumers, China might well be on the same trajectory.

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