Cover Story
Interview with Dolly Lo lroning Out the Kinks
Dolly Lo, an attorney with Baker and McKenzie's Taipei office, holds a J.D. from Harvard Law School and is a member of the Massachusetts bar. In the following interview Lo discusses developments in Taiwan's venture capital sector as well as a range of issues that affect investment in Taiwan.
+++Asia On-Line: What changes have taken place in Taiwan's venture capital sector during the last six months?
Dolly Lo: There hasn't been a lot happening in the area of actual changes in the regulations. There are proposals, as you know, but not much has happened since last September. The tax proposals and the repatriation - those are still the key issues.
But what you have had is a change in the key government project related to venture capital -- which was Catalyst -- and which is now Hambrecht & Quist (漢鼎亞太) . The deal looks real. But I guess my hesitation is that as of last August the deal with Catalyst looked like it was going to fly, too. But we knew there were going to be problems because there had been a change of people involved: former Minister of Finance Hsu Li-teh had really supported the Catalyst project, but now he's been moved to the Ministry of Economic Affairs (Editor's note: shortly following this interview, Hsu Li-teh resigned from the MOEA in connection with the Cathay financial scandal. See story on page 39.) And then there had been some problems with the negotiations.
Hambrecht & Quist is the big government venture capital project in the works at the moment. The other venture capital people that I know of don't seem to have been that active.
+++AOL: There's still a question of whether venture capital in the American a product and an idea that you put into sense of the term can work here. Have you seen any evidence that it can?
Lo: We use the term venture capital here in Taiwan basically for investment companies that invest in the high tech area. My own knowledge of venture capital comes from practicing in Boston. There the concept is not necessarily hightech, but a product and an idea that you put into a firm- and you invest money. It’s very high risk with no clear return.
There the product is one that hasn’t necessarily been test marketed or which already has a market or a niche in the market- it’s something that will create an entirely new market. I don’t think they’re doing that here yet, because there is a concern degree of conservatisim and no one wants to invest in a company that might just be a guy with a brain and an invention. That’s the seed capital stage.
Now take a look at the government's choice for their new partner. H & Q is an established venture capital firm - but they're a cross, I think, between venture capital and investment banking. It's not pure venture capital - and I'm not sure they will put their money in real seed capital stage projects.
So I don't think that people in Taiwan as a whole really understand the venture capital concept, and even if they do I think they're very cautious and very conservative.
+++AOL: Do you think people are more sober and aware of the limitations of venture capital in Taiwan than they were six months ago?
Lo: Yes. I don't know in comparison to last fall, but definitely compared to the
summer of '83 when everyone was so excited about venture capital. People have
now sobered to the realities that the problems with Taiwan are the tax, repatriation issue, and the lack of a mature securities market.
+++AOL: Do you think that the recent Cathay scandal will have a significant and long-term effect upon foreign investors looking at Taiwan?
Lo: It probably won't affect investors coming here to manufacture. They only care about the labor pool, and engineers and land. But it will affect venture capital companies who come here and say "Okay, we'll invest in this business,'' if it looks like that business could evaporate over-night. I mean, if Cathay can evaporate overnight, then you're really not sure.
The problem is many of the practices that Cathay used are used by everyone -you know, lending money, shareholders lending money to the company at high interest rates, the use of post-dated checks for receivables - all of these things are common practice here.
Now, if I were H & Q,or any company coming in and wanting to throw in $10 million or however much they're willing to put in, I would care about the whole environment. And another big part of that is the accounting standards and the whole auditing problem.
+++AOL: So the Cathay scandal is not an isolated incident?
Lo: Even before Cathay you have a whole series of problems, Hsing Yi and Paolung - two major Taiwan firms involved in loan default scandals - all of them have problems with their documentation and their financial statements.
+++AOL: So the outside accountants can't really tell what's going on by looking at the books...
Lo: That's what they claim. So what they've said is that they do not guarantee the accuracy of the figures, and they don't guarantee their opinion. So, that whole thing is a problem. And I think it's a problem with the whole business environment. There unfortunately is not, I feel, a clear regard for the law. I'm not sure that there's a systematic enforcement of the law in this economic area.
+++AOL: Is the government trying to change this?
Lo: They have struggled very hard and they want to tighten some of the controls on accountants and the auditing procedures, etc. So there's a real movement in this direction.
+++AOL: Do you think that the counterfeiting image hurts prospects for venture capital?
Lo: Yes and no. I don't think it hurts necessarily the venture capitalist with the money. What it hurts is people with technology that want to come into Taiwan. We've been approached by big names in their fields that want to come in and they ask, ''How can I protect my technology? What can I do? Can I register this patent? Can I get a copyright on this? How about technology knowhow agreements?' And we say, "Yeah, well you can do this, maybe -no,you usuallyly can't get this.'' But the problem is, and I tell them, you can write all the agreements you want, but it's still that person and do you trust that person.
以下中文翻譯僅供參考
Dolly Lo是貝克‧麥堅時台北辦事處的律師，擁有哈佛法學院法學博士學位，並且是麻薩諸塞州律師協會會員。在接下來的訪談中，羅討論了台灣創投產業的發展以及影響台灣投資的一系列問題。
+++AOL：過去六個月台灣創投產業發生了哪些變化？
Dolly Lo：在法規的實際變化方面並沒有發生太多變化。如你所知，有一些建議，但自去年九月以來並沒有發生太多事情。稅收提案和匯回——這些仍然是關鍵問題。
但與創投相關的關鍵政府項目（之前是 Catalyst）發生了變化，現在是 Hambrecht & Quist。這筆交易看起來是真的。但我想我的猶豫是，截至去年八月，與 Catalyst 的交易看起來也將順利進行。但我們知道會有問題，因為涉及的人換了：前財政部長徐立德確實支持Catalyst項目，但現在他調到了經濟部（編者註：不久之後）在這次採訪之後，徐立德因國泰金融醜聞而辭去了經濟部的職務。
Hambrecht & Quist 是目前正在進行的大型政府創投專案。據我所知，其他創投人士似乎不那麼活躍。
+++AOL：仍然存在一個問題，即美國的創投產品和想法是否可以在這裡發揮作用。你有看到任何證據表明它可以嗎？
Lo：在台灣，我們使用創投一詞基本上是指投資高科技領域的投資公司。我自己對創投的了解來自於在波士頓的實踐。那裡的概念不一定是高科技，而是你投入公司並投資的產品和想法。這是非常高的風險，沒有明確的回報。
該產品不一定經過市場測試，也不一定已經擁有市場或在市場中佔有一席之地——它將創造一個全新的市場。我認為他們還沒有這樣做，因為存在一定程度的保守主義擔憂，沒有人願意投資一家可能只是一個有頭腦和發明的公司。這就是種子資本階段。
現在來看看政府對他們的新合作夥伴的選擇。漢鼎亞太是一家成熟的創投公司，但我認為它們是創投和投資銀行業務的結合。這不是純粹的創投——我不確定他們會把錢投入真正的種子資本階段專案。
所以我不認為整個台灣人民真正了解創投的概念，即使他們了解，我認為他們也非常謹慎和保守。
+++AOL：您認為人們是否比六個月前更清醒並認識到台灣創投的限制？
Lo：是的。我不知道與去年秋天相比，但肯定與83 年夏天，當時每個人都對創投感到興奮。人們有現在清醒地認識到台灣的問題是稅收、遣返問題和缺乏成熟的證券市場。
+++AOL：您認為最近發生的國泰醜聞會對外國投資者關注台灣產生重大和長期的影響嗎？
Lo：這可能不會影響投資者來這裡生產。他們只關心勞動力、工程師和土地。但這會影響到這裡並說「好吧，我們將投資這項業務」的創投公司。
問題是國泰航空使用的許多做法是每個人都在使用的 - 你知道，放貸，股東以高利率向公司借錢，使用遠期支票作為應收賬款 - 所有這些都是這裡的常見做法。
現在，如果我是漢鼎，或者任何一家想要投入 1000 萬美元或他們願意投入的金額的公司，我都會關心整個環境。其中另一個重要部分是會計準則和整個審計問題。
+++AOL：那麼國泰航空醜聞並不是個孤立事件？
Lo：甚至在國泰之前就已經遇到了一系列的問題，信義和寶隆——兩家捲入貸款違約醜聞的台灣大公司——他們的文件和財務報表都存在問題。
+++AOL：所以外部會計師無法透過查看帳簿來真正了解發生了什麼...
Lo：他們就是這麼說的。所以他們所說的是他們不保證數字的準確性，也不保證他們的觀點。所以，整件事都是一個問題。我認為這是整個商業環境的問題。不幸的是，我認為，人們並沒有明確尊重法律。我不確定這個經濟領域是否有系統性的執法。
+++AOL：政府正在努力改變現狀嗎？
Lo：他們一直在努力奮鬥，他們希望加強對會計師和審計程序等的一些控制。 所以在這個方向上有一個真正的運動。
+++AOL：您認為仿冒形像是否會損害創投的前景？
Lo：是的，也不是。我認為這不一定會傷害那些有錢的創投家。傷害的是那些想要進入台灣的有技術的人。一些領域內的知名人士與我們接洽，希望加入進來，他們問：“我如何保護我的技術？”我能做些什麼？我可以註冊這個專利嗎？我可以取得這個的版權嗎？技術知識協議怎麼樣？我們說，「是的，你可以做到這一點，也許 - 不，你通常無法得到這個。」但問題是，我告訴他們，你可以寫下所有你想要的協議，但它仍然是人，你信任那個人嗎？
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