By George Chen and Narayanan Somasundaram

HONG KONG, Nov 12 (Reuters) - Private equity groups investing in China must give up on the idea of taking control of target companies, which often are run by entrepreneurs with an emotional stake in their businesses, influential dealmaker David Liu said on Thursday.

"Frankly, those strategies don't apply in China," Liu, head of Greater China for Kohlberg Kravis Roberts & Co [KKR.UL], said at a forum.

"Most in China now are first-time entrepreneurs. They view their business as their baby. If their baby is healthy, there is long term potential, they don't want to sell.

"For a market like China, most of the good business today is not for a change in control sale," he told an audience at the AVCJ Private Equity & Venture Capital Forum.

Beijing, which has historically viewed private equity firms as speculators, is becoming more welcoming of foreign funds to invest in China, thereby creating more local jobs.

But foreign investors have complained it remains difficult to win government approval for control of market leaders, so buyout deals are rare in the Communist nation.

In 2008, U.S. buyout giant The Carlyle Group [CYL.UL] eventually walked away from three years of negotiations to buy Xugong, China's top construction equipment maker, after running into bureaucratic obstacles. [ID:nSHA323138]

"In most other markets, most people know what others are doing on the deal side. Deal flow is transparent. Most of the deal is facilitated by investment bankers. It is almost like buying artwork in Christie's or Sotheby's," said Liu.