As the 8th largest trading entity in the world, Hong Kong’s power is far larger than our population of 7 million might suggest. With a low tax rate and our closeness to mainland China, Hong Kong has developed a reputation as a unique platform for companies wanting to excel in the Asian market. Yet encouraging innovation, startups and entrepreneurship is also a critical part of Hong Kong’s strategy to remain relevant in the global market place, especially within the tech sector.
Given our size, it’s not surprising that both public and private entities in Hong Kong work hard to support the growth of entrepreneurialism and encourage businesses to stand on the cutting edge – and that support is only increasing. Whether you’re based locally or are thinking about coming to Asia for a business venture, setting up shop in Hong Kong offers key advantages:
With more than twenty funding programs, the Hong Kong government helps create a strong environment that encourages startup activity and growth in the tech sector. Over the past year, new programs have been introduced and others have experienced big boosts to their funding. For example, in 2015 our government introduced the Enterprise Support Scheme to encourage more private sector investment in research and development activities in innovation and technology sector. Private companies of any size are eligible for up to $10 million in matching funding to carry out specific research and development initiatives. The government hopes the fund will help expand Hong Kong’s technology sector while also encouraging innovation and diversification. It is a major funding initiative under the Innovation and Technology Fund (ITF), which is designed to increase the added value, productivity and competitiveness of our economic activities.
Hong Kong hosts a range of incubators and accelerators for startups and entrepreneurs. These programs make starting a business far more accessible and attainable – and not just to experienced serial entrepreneurs. We’ve seen a big increase in new graduates looking to start a business venture rather than pursuing a job with a traditional company, for example, and growing interest from people at all career levels in pursuing hot new business ideas.
Programs offered by organizations such as Paperclip and CoCoon make it easier for startups to get off the ground by providing affordable co-working space, classes and peer networking opportunities. Others like Blueprint and Nest in Hong Kong, an application-based accelerator program, provide selected companies with access to space, professional services, experienced mentors, connections to VC investors and market testing. Hong Kong’s government has also been running several big incubators, including Cyberport and the Hong Kong Science and Technology Park (HKSTP). HKSTP currently has approximately 200 companies going through their incubation program and Cyberport’s digital cluster includes over 740 community members.
In the US, many startups rely on corporate investors – large companies that inject money into startups in their own or related industries to provide cross-fertilization and advance development of the industry. However, this has not traditionally been the case in Hong Kong. According to the recent research report “Crouching Tigers, Hidden Dragons,” corporate investment in Hong Kong has lagged behind many leading countries. In fact, CrunchBase recently recorded only 3% of institutional investments by Hong Kong based corporations.
But this trend is starting to change and we’ve seen strong progress in this area in the form of new programs. One such initiative is the Empowering Young Entrepreneurs (EYE) program. A collaboration between Google and the Center for Entrepreneurship at the Chinese University of Hong Kong started in 2014, EYE focuses on raising awareness and encouraging local youngsters and entrepreneurs to innovate and promote Hong Kong as a city for entrepreneurship. The 2015 EYE program was kicked off in July 2015 which selected 10 teams to go through a 5-month period of mentorship including an oversea site visit to Google’s office before showcasing and pitching their ideas to investors in November.
For businesses looking to target the Asian market, Hong Kong offers a welcoming springboard to test market concepts, products and engagement tools. Additionally, the government of Hong Kong has been working with mainland China in order to get more agents on the ground that can assist companies that want to use Hong Kong as a gateway to China’s larger market. While this integration is still a work-in-progress, the commitment to enhancing collaboration and access is a positive step that will be beneficial to startups and innovative companies in the future.
These advantages, plus a talent pool that draws from our well-educated, tech savvy population and one of the world’s most favorable tax environments, make Hong Kong a great place to start your next business.
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As the Head of TMT and Head of High Growth Technology and Innovation Group for KPMG in Hong Kong, Irene Chu actively works with leading technology companies and emerging companies to support various stages of their development and growth strategies. She and her team also collaborate with government agencies, startups incubators, early stage investors, universities and corporates to help promote and support the entrepreneurial ecosystem in Hong Kong.
Quarterly global report on VC trends published by KPMG Enterprise.