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Start-ups

More to the economy than finding next Google or Facebook, Hong Kong’s small business owners say

As officials pour resources into the technology sector in hope of breeding the next big thing, low-tech entrepreneurs say they feel left behind, and appeal for greater government support

PUBLISHED : Sunday, 24 December, 2017, 11:03am
UPDATED : Sunday, 24 December, 2017, 11:02am

Over the past several years Hong Kong has been trying to reinvent itself as a hi-tech hub, looking to turn start-ups into the next Facebook or Google. But with the focus on technology, other entrepreneurs say they are being neglected, even though they feel they are just as important to the city’s economy.

After his recycling business collapsed four years ago, Wouter van Marle established a hydroponics start-up, which allows Hongkongers to use their balcony or rooftop to grow vegetables such as choi sum and bok choi, as well as herbs.

Van Marle self-funded his business – also known as bootstrapping – but found it difficult to tap sources for financing and marketing advice, which were more widely available for tech start-ups.

“From the point of view of investors, I don’t really understand it. Because the chance of making money with [my business] is much better than the chance of making the next big thing on the internet,” van Marle, owner of City Hydroponics, said.

“Of course, they will never make billions on this, but the chance of making it profitable is much greater.”

Van Marle added that there were “many more of these relatively small ideas” being ignored.

According to the government’s investment promotion arm, InvestHK, there are about 2,000 start-ups in Hong Kong – mostly tech-related.

Prior to the internet boom, Hong Kong was mainly a trading and finance hub for the region. But the internet revolution has investors and the government clamouring to find the next technology unicorn – a company valued at more than US$1 billion – leaving traditional or low-tech businesses to fend for themselves.

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Rebecka Lundin, a full-time product developer for a major international clothing retailer in Hong Kong, moonlights as a skin care start-up entrepreneur. She said she hoped for subsidised spaces for low-tech retailers to help generate interest in businesses like hers – an advantage given to tech start-ups in areas such as the Science Park in Sha Tin and Cyberport in Pok Fu Lam.

“I would love to have a workspace that’s also retail all in one,” Lundin, the owner of Swedish’s, said.

Lundin said she got the feeling “nobody cared” about businesses like hers and she would like to have support similar to tech start-ups so she could concentrate on her business full time.

But Chinese University associate professor of economics Terence Chong Tai-leung argued that the government could not support every industry and would probably like to sunset certain low-tech sectors in favour of hi-tech industries, hoping to hit the jackpot with another Apple or GoGoVan – an app-based transport and logistics service and one of Hong Kong’s successful unicorns.

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Other than subsidised work spaces, the government also provides for tech start-ups an incubation programme which provides up to HK$330,000 in financial assistance, subsidised legal fees, subsidised training, trade fair or exhibition services, advertising subsidises and networking and mentorship opportunities. Most of these are not available to low-tech start-ups.

Now, however, two local entrepreneurs have decided to take matters into their own hands and establish their own start-up that helps low-tech small businesses and home-based entrepreneurs get noticed by customers and potential investors.

Anasua Chatterjee and Sai Sudha Chandradekaran started Hidden Truffles in 2014 after seeing a wide range of start-ups with customers confined to family, friends and peers, without the knowledge or money to break out.

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“Somehow we felt all of them were stunted in their growth and were only kept within friend circles ... they did not have a way to grow professionally,” Chandradekaran said.

Most home-based start-ups received an opportunity to meet their customers in person at various pop-up bazaars held around the city several times a year, Chatterjee said.

But going beyond bazaars was where start-ups would succeed, the pair believed. So the duo started “pitch nights” for entrepreneurs to get start-up owners out of their comfort zones and thinking outside of their usual customer base.

“They’ve stopped thinking beyond B2C [business to customer], and pitch night allows them to strike a professional relationship with somebody unknown and coach them about doing business in this day and age,” Chandradekaran said.

After three years, their company has a listing of about 250 ultra-small businesses which can be discovered by customers, investors and firms. They have also seen audiences grow for their pitch nights, which Chatterjee and Chandradekaran said proved there was still interest in low-tech, home-based, small businesses.

“Two judges from one of our pitch nights asked us to connect them with two of the businesses because they wanted to follow them and see if there was potential to invest in them,” Chandradekaran said.