Sep 28, 2012 · 1 minute

Too many tech stocks, overly aggressive competition, struggles to find talent – these are the challenges facing China's venture capital market, and it all amounts to one thing: the golden days are over.

Well, the easy golden days are, at least.

A panel of investment experts speaking at the Silicon Dragon conference in Shanghai have expressed a pragmatic rather than pessimistic view of the future for VC in China, according to TechRice.

The next five to 10 years will put VC funds to the test, said GGV Capital's Jenny Lee, who believes the days of "grand slams" delivering 25x returns and "easy home runs" of 10x returns are done.

Her view was echoed by fellow panelists Qiming Ventures' Hans Tung and Steamboat Ventures' Alex Hartigan, who said consolidation of tech companies in China is needed. Tung said startups will struggle to recruit talent and compete against rivals who are willing to bend the rules – through bogus orders and fake traffic – to get ahead. To survive, they need grizzled veterans such as Xiaomi's Lei Jun, he suggested.

Hartigan, meanwhile, said an industry shake-up is likely to play out over several years and he expects VC firms to respond by specializing in certain areas, such as biotech, or in certain stages, such as Series A or B . He expects the formation of new funds to coincide with a consolidation of talent in the VC sector.

Qiming's Tung on the other hand has faith in the healthcare and mobile Internet sectors. China's rapidly aging population offers opportunities for Chinese-made breakthroughs in medical technology. The mobile population, too, is already huge – 72 percent of all China's Internet users get online with a mobile phone. If we are patient, we will see a new generation of Chinese entrepreneurs grow up to cater to these sectors, said Tung.

[Thanks to the always excellent TechRice for on-the-ground reporting]