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excerpt: In China, the red-hot tech scene seems dominated by a small group of entrepreneurs who paid their dues in Silicon Valley before returning home to create successful Internet and software startups. Aside from finding fame and fortune, these "returnees" are also laying the foundation for a startup culture that will allow grassroots entrepreneurs to flourish as well. Returnees - Chinese nationals who studied or worked the U.S. - head up just 3 percent of all tech companies in China, yet they represent nearly 70 percent of all startups that go public in the U.S. market (still the largest measure of success in the industry), according to an internal study by Palo Alto, Calif.-based venture capital firm GSR Ventures, which deals exclusively in China. The firm also found startups created by returnees were much likelier to become financially successful and hire more employees than startups founded by Chinese entrepreneurs who never worked in the U.S. Part of that may be cultural: a culture Jack Jia, a partner at GSR sees changing, albeit slowly. he still sees a "drastic" disparity between startups founded by home-grown entrepreneurs and their returnee counterparts during pitching sessions and business plan competitions all across China. Thus, he rarely funds companies headed up by Chinese engineers without managerial-level experience at tech companies in the U.S., even though he would like to encourage the growth of Chinese entrepreneurs who have stayed at home. "Most have no clue what they are doing. The basic expertise, the passion and experience is often lacking," he said. "And it's not that they don't have the same talent or ability, it's just they haven't been exposed to the same things as their American counterparts."