Hong Kong in danger of losing its renowned entrepreneurial spirit
The government talks up an impressive public relations about helping start ups. But in reality bureaucrats staunchly protect the entrenched wealth in this city: property owners and tycoons with outdated policies
Hong Kong, with the bellicose frivolity of senile and oblivious governments, is determined to resist any calls for change and commit even minor resources to economic transformation.
The Hong Kong government talks up an impressive public relations image about helping start ups and encouraging innovation. Despite its relentlessly cheerful tone and aggressively unthreatening aesthetics, the reality is that its bureaucrats staunchly protect the entrenched wealth in this city — property owners and tycoons with outdated policies.
The Post recently featured a story about three young Hong Kong entrepreneurs who decided to cross the border to set up business in the Qianhai free-trade zone in Shenzhen. One of them was rejected by the entrepreneur programmes at Cyberport and Hong Kong’s Science Park.
In Qianhai he was able to operate at a third of the cost of his Causeway Bay office of similar size. The Shenzhen market gave him access to a much bigger internet financing and the mainland market. And it has evolved a more supportive community of entrepreneurs unlike Hong Kong, which is dominated by speculators and punters who aren’t worth pitching to.
It is impossible for many young entrepreneurs to access Hong Kong government’s startup funds. Their requirements are all unrealistically high; in particular, they demand historical profits or too much up front capital or experience.Worst of all, the people reviewing them are government bureaucrats who are poorly equipped and too timid to make venture capital choices. Startups rarely make profits in their crucial early years so even tax breaks are useless.
Audacious entrepreneurs always manage to find solutions to bring their product to market and to find that next financing round. Leaving Hong Kong for Qianhai is just another path that they are forced to take, but it diminishes Hong Kong’s opportunity to reinvent itself.
The government should make an aggressive effort to jump-start new ideas by simply allocating, let’s say, HKD1 billion to fund 1,000 worthy Hong Kong startups with a million dollars each and free office rent. The goal is to see if they can come up with the next step – turning a concept into a real business.
Sound crazy? But, you have to start somewhere and many local startups are paralysed without startup capital. A billion dollars isn’t so much considering the government is dropping HKD5.8 billion for the taxpayer’s share of HK Disney’s expansion. Whether or not you think it will ever return its original investment, Disney is not the future of the HK economy.
Smart venture capitalists are already looking beyond pure internet businesses like e-commerce and B2C. The new internet involves material sciences and artificial intelligence and disintermediating transportation. Hong Kong is far behind in these areas and still using the internet to book light goods vans and take out food delivery.
A few weeks ago, the Monetary Authority of Singapore staged ‘Fintech Festival’, a kind of love-in for tech attended by an astounding 12,000 peoplem with others turned away. The MAS even operates its own fintech investment fund, something our Hong Kong Monetary Authority couldn’t even conceive of doing.
The pace of technology change will only increase over the next 20 years. But, the dirty secret is that in my off-the-record conversations with senior regulators, none of them thought fintech is worth taking seriously. They think it is a novelty with minimal impact on Asia’s financial industry.
Peter Guy is a financial writer and former international banker