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Heading the cloud: Google says now is best time to launch a start-up in Asia due to low IT costs and broad adoption of mobile devices

Cloud technology and e-commerce translate into huge savings for business owners who no longer need to pay for physical premises or own servers

PUBLISHED : Tuesday, 27 October, 2015, 11:25am
UPDATED : Tuesday, 27 October, 2015, 2:04pm

Low capital requirements, advanced technology and the widespread use of mobile devices make launching a new business far easier than ever before, according to a senior executive at Google.

The Greater China region including Hong Kong and Taiwan shows great potential due to the high penetration rate of smartphones, which mean that many transactions can be done within just a few clicks, said Kevin O’Kane, Google’s managing director for small and medium business in the Asia-Pacific region.

“The internet has opened up a whole host of opportunities for new businesses. It’s far easier to ‘set up shop’ online,” said O’Kane, a former senior executive at Dell.

The internet “has dramatically reduced the start-up capital required and has levelled the playing field in terms of finding and serving customers, not only around the corner but around the world - something that was nearly impossible for all but the largest global businesses just a few years ago,” he added in a recent interview with the South China Morning Post.

In China, Premier Li Keqiang has called on “everybody to innovate and start your own business”, partly due to growing pressure on Beijing about how to transform its economy from a labour intensive and export-focussed one to a more digital and innovation-driven model.

Meanwhile, from local coffee shops to airport booths, Hong Kong has seen a start-up frenzy this year, especially among the more ambitious and digital-savvy younger generation.

When asked what start-ups need to succeed, O’Kane said it’s about finding the right way to provide the right information to potential consumers on mobile at the right time.

There are already 2.1 billion smartphone subscriptions worldwide, a number that grew 23 per cent last year.

O’Kane praised the so-called “mobile first” business environment in Asian countries with high levels of smartphone penetration like Singapore (88 per cent), Hong Kong (79 per cent), Taiwan (78 per cent) and the Chinese mainland (74 per cent).

“The most forward-looking companies are building mobile-first solutions to reach their users and customers. Asia understands these trends better than anywhere else,” he said.

Business owners no longer need to set up an offline store, which removes high rental pressure. Moreover, information technology (IT) costs supporting a new business have fallen.

“In the past few years, the cost of computing has dropped dramatically. A new business with a great idea now has access to massive computing and storage resources and can get started hosting their data and infrastructure in the cloud for next to nothing,” said O’Kane.

Just few years ago, many small companies had to pay big salaries to their IT support teams. A chief technology officer’s annual income could easily go beyond HK$1 million (US$130,000) in Hong Kong. Nowadays, many local businesses have turned to Google and Amazon for IT support “in the cloud” so they can store and process data and information on the internet at far lower cost rather than using their own servers.

O’Kane cited Hong Kong’s Store Friendly as an example. In a city like Hong Kong — one of the most densely populated cities in the world — space is in short supply. Kevin Chan, founder of Store Friendly Self Storage Co, saw an opportunity to improve local people’s daily lives by offering them good and affordable storage rental services.

Chan founded the company in 2002. Since then, Store Friendly has leveraged some of Google’s services such as Google AdWords and Google Analytics at low marketing cost or sometimes even free of charge to promote his business in and beyond the city.

At present, Store Friendly is already one of the largest self-storage service providers in Asia, with over 130 branches across five markets and a total storage area of 1,000,000 square feet. Others can learn from and copy its success if they get the right access and means to market their business and find their customers effectively, said O’Kane.

Google was also once a start-up. Founded in Silicon Valley, its mission statement was to “organise the world’s information and make it universally accessible and useful”.

“Small businesses and the products and services they offer are one kind of ‘information’. The details of where businesses are located and things like opening hours used to be hard to discover, but the web has made this information much more accessible,” said O’Kane.

“Recently, we coined the phrase ‘micro-moments’ to describe the moment when consumers want to do something and reach for a device — usually a smartphone — to complete the task,” he added.

According to Google’s research, the percentage of online shoppers who now buy products using their smartphones is skewing in favour of Asia and China.

In China, the rate is 21 per cent, compared to 16 per cent in Hong Kong, 10 per cent in Taiwan and just 10 per cent in the US.