Hong Kong mobile app industry urged to aim Southeast Asia, Taiwan amid declining profits

PUBLISHED : Thursday, 26 May, 2016, 4:52pm
UPDATED : Thursday, 26 May, 2016, 4:52pm

Hong Kong mobile app companies should look towards regions such as Southeast Asia and Taiwan to expand their market amid slowing profitability and revenues in the field, according to an industry survey.

The Mobile Apps Industry 2016 survey, which surveyed 100 mobile app companies in Hong Kong and is the third study conducted by the Academy of Hong Kong Studies and the Hong Kong Institute of Education, indicated that only 25 per cent of its respondents indicated that their business was profitable. This is down 41 per cent from last year, when 43 per cent of the companies reported that they were in the black.

“The [mobile app] industry is facing a more challenging environment this year ... [which] largely reflects the declining economic situation in Hong Kong in general,” said Brian Fong, associate director of the Academy of Hong Kong Studies and the Hong Kong Institute of education.

“[Companies] have to think about how to expand the market,” he added, pointing to results that showed over 60 per cent of Hong Kong mobile app companies focused on the local market. “Apart from exploring the mainland market, we should also ... explore the Southeast Asian and Taiwan markets.”

The number of companies which reported deficits hit 41 per cent of all respondents, up from 24 per cent in 2015, according to Fong. Revenues have also declined across the board, with over half of the companies drawing in yearly revenues of less than HK$500,000.

The survey also found that a major challenge for mobile app companies was the lack of funding for their businesses, although 26 per cent of respondents indicated that they received funding from government schemes to start the company, about one-third more than last year. Three-quarters of the companies also stated that they received no funding once they set up the company, he added.

“Most of the founders rely on their own funding to start their business, and raising funds is still a big challenge for the founders,” said Fong, pointing out that 90 per cent of the founders surveyed said they funded their own businesses.

“We need to think about how to resolve the issue of raising funds and capital for the industry ... after the companies have started the business,” he said. “[Helping] businesses to get more funds to consolidate and expand their business remains a very important challenge.”

Wendy Yung, executive director for the Hong Kong Wireless Technology Industry Association (HKWTIA) urged companies to leverage government spending and associations like the HKWTIA to help in funding and their business.

Yung also expressed optimism on the outlook for women founders in Hong Kong’s mobile app industry, with a quarter of founders surveyed being female.

“There is ... an influx of female coders and developers, evening out the male-dominated playing field, and this is a trend that will gain further momentum as the growing tech industry in Asia pushes for more hiring,” she said.