A bubbling entrepreneurial scene, with major investment flows from overseas and a hyper-connected population with astute business sense: Hong Kong has most of what it takes to become the prime Asian tech hub.
With its community of ambitious high-tech entrepreneurs and a hyper-connected population of businesspeople working in international markets, over the last two years Hong Kong has become a true technology hub with growth potential among the highest in Asia. An interesting infographic commissioned by the travel club HotelClub.com team and created by English graphic designer Ally Biring reveals that the Hong Kong territory has seen the emergence of a huge number of startups. Around 150,000 new companies were set up there in 2011, putting it even ahead of New York City with its 65,000 fledgling firms. Between 2009 and 2012, the number of startups registered for the programme at leading incubator Accelerator HK went from 6 to over 5,000, demonstrating the exceptional dynamism there. In fact Paul Orlando, co-founder and director of Accelerator HK, goes so far as to compare Hong Kong to NYC in 2008, when the entrepreneurial scene in the Big Apple was just starting out.
There are many reasons for this phenomenon. First of all, the percentage of the HK population with Internet access – 90% – is much higher than in Beijing (72%) or Shanghai (66.2%) and HK’s mobile penetration shows a similar lead. The average person in Hong Kong owns more than two mobile phones, compared to the 81% in mainland China who own one. Moreover, in the last twelve months the number of co-working spaces has multiplied by a hundred. To these factors must be added the presence of the ‘Great Cyber-Wall’, the notorious online censorship from which entrepreneurs in mainland China suffer. In addition, the HK local authorities encourage business and professional people to get together and they lend a good deal of administrative support to entrepreneurs. It only takes two days to open a bank account there or to register a new company, while in Beijing or Shanghai it generally takes over two months. All these advantages have attracted the attention of overseas investors. Moreover, since 2010, 18 Chinese high-tech firms have delisted from Wall Street to join Hong Kong’s stock exchange.
Threats to further development
However, the Hong Kong tech entrepreneur community still has a number of serious obstacles to deal with. Firstly, real estate prices are scarcely affordable. In 2013, average monthly rents are 30% higher than in New York. Secondly, startups have a tough time scaling up in a market of just 7 million potential customers – tiny compared with mainland China’s 1.3 billion consumers. Thirdly, there is relatively little local investment in research and development: last year only 0.73% of Hong Kong’s GDP was invested in the R&D field. Last but not least there is the question of investor confidence. In a place where traditional sectors such as finance and real estate are still very healthy, it can be difficult to persuade investors to fund the new – as yet unproven – high-tech sector.