Hong Kong at 'tipping point' of becoming fast-growing and dynamic start-up ecosystem
Hong Kong is rolling out the welcome mat to a new-generation of fearless and innovative entrepreneurs as the city hopes to create a dynamic ecosystem for start-ups, experts said at the South China Morning Post's inaugural Game Changers forum.
Robin Hu, SCMP Group Chief Executive, said there was plenty of reasons for the city to be optimistic about embracing movers and shakers into the local economy.
"These entrepreneurs are game changers, and game changers have the knack of rewriting the rule book," Hu said.
Mainland China has set a fine example for the city, after the likes of internet company founders Jack Ma Yun of Alibaba Group, Robin Li Yanhong of Baidu and Pony Ma Huateng of Tencent Holdings set the stage for disruption and new growth in e-commerce, online search, messaging, social networks and payments.
Hu pointed out that the Hong Kong government is doing its part to engage more industry innovators.
Financial Secretary John Tsang Chun-wah said in February that the Hong Kong government will implement measures to help the city's estimated 320,000 small and medium-sized enterprises (SMEs), which employ about half of the private sector's workforce.
Measures include a HK$1.5 billion injection into funds that support SME marketing and development programmes.
The government will also promote a range of industries – including technology, fashion, film and arts – in a bid to diversify the local economy, which has long been driven by the financial services, property and retail sector.
Simon Galpin, the director-general of Invest Hong Kong, said the city was not only working hard to attract foreign direct investments, but also much-desired talent. "That's the real competition," he said.
InvestHK, the government agency responsible for promoting new investments and supporting overseas businesses to expand in the city, started to sharpen its focus on start-ups after seeing the steady increase of co-workspaces.
"In 2010, there were only three incubator and co-workspace locations in Hong Kong. We now have 35 as of last year," Galpin said. He added that there were also 1,065 registered start-up companies last year, with 2,381 employees.
More co-workspace locations have since been added to target the burgeoning local start-up community.
Swire Properties, the biggest landlord in Quarry Bay, opened in January its "blueprint" co-workspace service and start-up accelerator programme in a renovated office space at Taikoo Place. It marked the first start-up initiative organised by a commercial property developer in Hong Kong.
Business incubator Nest and Level39, part of British property developer Canary Wharf Group, raised the bar by launching a co-workspace venture designed to help financial technology start-ups in Hong Kong and London go global.
"So we're at a tipping point that with a bit more push and a bit more promotion, Hong Kong could really carve a place for itself as one of the fastest-growing and most dynamic start-up ecosystems in the world", Galpin said.
He pointed out that it was InvestHK's goal to convince more high-net worth individuals and families in the city, as well on the mainland, "to move away from just investing in real estate and become more active angel investors to start-ups in Hong Kong".
Simon Squibb, the chief executive at Nest, said in the first panel on "disruptive ideas" at the Game Changers event, staged inside the Kowloon Shangri-La hotel, that it was important that everyone gets behind "the concept of transforming the city into a knowledge-based economy, in which we take ideas and local brands around the world to show what Hong Kong can do and how far we've come from when we started as a service economy many years ago".
Panel participant Mikaal Abdulla, the co-founder and chief executive of 8 Securities, said an advantage start-ups have in the city, similar to that in California's Silicon Valley, is that "Hong Kong is incredibly accepting of failure and the ability to adjust and move quickly".
"In Japan, that's not the case because there is no tolerance for failure," Abdulla said, relating his experience in the world's third-largest economy.
Still, new ventures continually complain of a chronic shortage of cash, particularly for expansion and development after the initial start-up period.
But Jason Chiu, the chief executive at mobile commerce-focused Cherrypicks, said start-ups in Hong Kong must understand that the ability to raise funds quickly does not necessarily validate their product.
He pointed out that while his company had success in the past decade in raising funds to pursue aggressive expansion in mainland China, this campaign ultimately failed.
"That was a HK$200-million lesson for us," said Chiu, who urged start-ups to keep developing their product and execute their strategy well.