Why start-ups thrive behind China’s Great Firewall more than in Hong Kong, its freest city, and how to change that

Hong Kong needs a less rigid education system and more nurturing start-up environment to counter the lure of financial incentives and heavy R&D spending Shenzhen and other Chinese cities offer

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Singer Denise Ho performs on a street in Sheung Wan in June last year. Her fan base has grown in the wake of her being blacklisted by China. Photo: Sam Tsang

Published: 6:00am, 18 Jan 2017Updated: 5:46pm, 19 Jan 2017

With less than six months left in the hot seat, Chief Executive Leung Chun-ying and his administration is not going gently into that good night. First came news before Christmas that Hong Kong will build a local branch of Beijing’s Palace Museum. Then, right after the New Year, the government announced an even bigger project: the Lok Ma Chau Innovation and Technology Park, on the border with Shenzhen.

The 87-hectare site, which could easily swallow four Victoria Parks, will give the two neighbouring cities “unprecedented space and opportunities” to complement each other’s advantages, officials say. But why does a city like Shenzhen, which has nurtured global giants such as Tencent and DJI, still need us?

Many of Hong Kong’s traditional advantages are still in place: a low and simple tax regime, a sound legal system, freedom of expression, press freedom and ease of setting up a company. But other cities are desperate to attract the same kind of companies the Lok Ma Chau park will be gunning for – fast-growing technology start-ups and creative industries – and they offer attractive perks and a more nurturing environment.

Leung Chun-ying, in his last policy address as Hong Kong’s chief executive, indicated a desire to see the government drop its laissez-faire attitude for a more proactive one. He said the city had to consider offering tax concessions and financial incentives to attract more investment in innovative technologies, as other cities do, in order to remain competitive. He also raised the amount of funding available for startups and proposed an “InnoCell” project at the Hong Kong Science Park in Sha Tin with living and working spaces for overseas research personnel.

Local entrepreneurs say Hong Kong has quite a bit of catching up to do.

Michael Young, an industrial designer who moved to Hong Kong from Britain 10 years ago, says many designers think it is a no-brainer to set up shop in mainland China. “The Shenzhen government once offered me free use of a huge office for three years, plus half a million yuan (HK$563,000) to cover the set-up cost. The Foshan mayor’s office also approached me. That’s why so many creative people from all over the world are heading to Shenzhen and Shanghai. It’s mainly financial,” he says.

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