Why Hong Kong’s Entrepreneurial Reputation Is Growing
Hong Kong is quickly becoming an entrepreneurial hot-spot in Asia. The city, long known as destination for established businesses looking for a base from which to target other markets in China and South East Asia.
But changing international dynamics mean that many Chinese companies are now coming to Hong Kong before heading out into the wider world markets. This is creating a new domestic service market which is attracting and growing startups.
“Many mainland brands find that while they’re perfectly adequate in China, they don’t work overseas. This means that these companies are looking for other items – accounting, law, design, and digital marketing – that will help them develop strategies and brands that will work overseas,” says Simon Galpin, director-general of investment promotion at Invest Hong Kong (InvestHK). “They realise they need specialist help and that creates an opportunity for service providers.”
This has increased Hong Kong’s desirability as a go-to location forentrepreneurs looking to set up a business or take their first steps to expand internationally – further helped by increased aid for entrepreneurs and new startups.
“Certain emerging nations and economies will dominate trade over the coming years,” Doug Richard, Founder of School For Startups and former investor onDragon’s Den. “It’s not BRIC [Brazil, Russia, India and China]. I think Russia is going in its own direction but China is not just a trading opportunity but a source of wealth creation in its own right.”
For example, Hong Kong only had three new business incubation hubs about three years ago. There are now 32 of them that have given a starting boost to 1,600 companies between them, says Galpin.
“I’m optimistic about Hong Kong but the bus is leaving the station, which happens to me a lot,” Richard says.
Hong Kong’s growing entrepreneurial scene is also aided by the city’s historic stature as a hub for regional and global headquarters. This has provided new businesses with a way into markets as well as a source of funding, says Galpin.
For instance, Tesco has recently moved its global sourcing to Hong Kong – putting a team there that works with new companies to get their products on shelves in Tesco stores worldwide. “Counter-intuitively, if you’re a UK company and want to sell in Tesco, you might want to come to Hong Kong first to build those relationships,” Galpin adds.
Equally the headquarters mean that there are a significant number of high net-worth individuals based in the city. This can be an interesting untapped source of financing for entrepreneurs. “Many high net-worth individuals are also angel investors,” Galpin says. “Entrepreneurs are coming in and we’re convincing people working in traditional industries to come on board with supporting them.”
The global economy is continuing to shift. China’s importance as a marketplace continues to grow and the importance of south-south trade is also rising. Hong Kong is well placed to benefit from these factors influencing the world economy.
“School For startups is a canary in the mine,” Richard adds. “Not in the sense we die first, but in that we are a belle whether of cluster growth and formation. We saw Hong Kong and Columbia as the next two places we had to be in and if that doesn’t make sense you don’t track growth properly.”