Jump-starter goes to town

In­vest Hong Kong is see­ing an uptick ck in young en­trepreneurs look­ing to set up shop in the city as they seek to con­quer the world. Selena Li re­ports.ts.

China Daily (Canada) - - FRONT PAGE -

Aclearer pic­ture is emerg­ing as Hong Kong, an ideal “busi­ness” des­ti­na­tion, be­gins to shape it­self as one of the fastest grow­ing startup hubs.

“The per­cent­age of our clients that are re­ally en­trepreneurs rather than big­ger multi­na­tional com­pa­nies from main­land China or around the world has started to grow,” said Simon Galpin, di­rec­tor­gen­eral of in­vest­ment pro­mo­tion at In­vest Hong Kong (In­vestHK), the gov­ern­ment agency re­spon­si­ble for at­tract­ing and fa­cil­i­tat­ing for­eign di­rect in­vest­ment into Hong Kong.

The push-pull fac­tor be­hind it, Galpin said, is the rapid growth in Asia, par­tic­u­larly the Chi­nese main­land mar­ket, and the flat­tened economies of North Amer­ica and Europe.

“If you’re an en­tre­pre­neur and want to start a high-growth busi­ness, com­ing to Asia and start­ing off your busi­ness in Hong Kong is a sen­si­ble choice,” he said.

“The global el­e­ments of Hong Kong will be­come more im­por­tant be­cause we are at­tract­ing star­tups and although they’re very small, they all have global as­pi­ra­tions. They want to con­quer the world.”

Ac­cord­ing to a sur­vey con­ducted late last year, there are 1,065 reg­is­tered startup com­pa­nies op­er­at­ing in the city’s bur­geon­ing co-work­ing spa­ces, in­volv­ing more than 2,300 staff.

“What we have no­ticed is that the or­ga­ni­za­tions that are sup­port­ing star­tups, both in the public or pri­vate sec­tor, have grown from just three in 2010 to more than 35 to­day,” Galpin said.

“The Hong Kong star­tups com­mu­nity is truly global,” he said. “About 40 per­cent are ei­ther for­eign-born or peo­ple re­turn­ing to Hong Kong to start a busi­ness.”

With the help of tech­nol­ogy, small busi­nesses are able to cre­ate a global reach, and that makes Hong Kong a sweet spot for star­tups, Galpin said, adding a com­pact place like Hong Kong benefits from its high busi­ness ef­fi­ciency and great ac­ces­si­bil­ity.

“Most star­tups with a global as­pi­ra­tion are in a real rush. They feel they have got to get their prod­ucts or ser­vices out to the world mar­ket be­fore some­body beats them to it,” he said.

Two months ago, just across the bor­der, the Shen­zhen hub of Qian­hai opened an in­no­va­tion hub des­ig­nated for young en­trepreneurs to start their busi­nesses.

“I think Qian­hai will com­ple­ment HK,” Galpin said. “This is a win­ning com­bi­na­tion be­cause if they want man­u­fac­tur­ers maybe they can do their pro­to­typ­ing and maybe R&D in Hong Kong, they can do the fi­nanc­ing in Hong Kong. But if you want man­u­fac­ture they can do it just 20 or 30 kilo­me­ters across the bor­der in Shen­zhen or Qian­hai.”

“Many pro­fes­sion­als in Hong Kong use so­cial me­dia that you have right across the Chi­nese main­land. They also use so­cial me­dia that are be­ing used in North Amer­ica and Europe as well. Most star­tups want to take the ad­van­tage of that,” he added.

In talk­ing about the ris­ing costs of of­fice space that may push busi­ness away, Galpin ex­plained that Hong Kong of­fers a range of dif­fer­ent op­tions at very dif­fer­ent prices within a small area.

Be­side strong tra­di­tional fund­ing sup­port, In­vestHK has no­ticed an­other emerg­ing op­por­tu­nity among main­land and Hong Kong high net worth in­di­vid­u­als.

“Not just Hong Kong, but also main­land en­trepreneurs are us­ing Hong Kong’s fam­ily of­fices for wealth man­age­ment. But nor­mally they are will­ing to make more tra­di­tion­al­traprop­erty in­vest­ments, like prop­erty and stocks,” Galpin said.

“If we can com­mu­ni­cate ate that there are th­ese new op­por­tu­ni­ties­r­tu­ni­ties with all this fast growth of star­tups in Hong Kong, we hope thatt some of those more tra­di­tional in­vestorsstors will sup­port the star­tups too.”

In­vestHK makes use of part­ners and in­ter­me­di­aries, in­clud­ingding law firms, con­sult­ing firms al­ready en­gag­ing with wealthy in­di­vid­u­als di­vid­u­als and mak­ing ef­forts to reach ch out to an­gel in­vestor net­works as well.

“One of the rea­sons we e do the ven­ture pro­gram is to reachch out to some of the wealthy in­di­vid­u­als,” vid­u­als,” Galpin said.

“Un­der­stand­ably many y fam­ily of­fices — not just main­land d but for­eign fory or Hong Kong fam­ily of­fices — like to be quite low pro­file, file, they don’t want to be both­eredd by anyn any­body try­ing to sell them an in­vestesin­vest­ment op­por­tu­nity. So it takes a bit of a time to build up trust with h some of th­ese key in­di­vid­u­als.

In­vestHK or­ga­nized the he 2014 Start­meupHK Ven­ture Pro­gramme, gramme, the world’s sec­ond-largestt startup con­test, which saw 550 en­tries ries filed from 47 economies, com­pared­pared to 384 en­tries from 39 economiesi i in 2013.

The depart­ment aims to at least dou­ble the size and scale of the next startup ven­ture pro­gram next Jan­uary.

“Look­ing for­ward, we think Hong Kong is at a kind of tip­ping point. And with a lit­tle bit more pro­mo­tion, a lit­tle bit more push, we can re­ally po­si­tion Hong Kong as not just one of the fast-grow­ing star­tups com­mu­ni­ties, but one of the more in­flu­en­tial ones.”

One added ben­e­fit Hong Kong en­joys is that it is home to more than 3,500 re­gional head­quar­ters and re­gional of­fices, Galpin said.

But main­land megac­i­ties are not too far be­hind, it would ap­pear. The cap­i­tal’s Chaoyang dis­trict is shap­ing up to be the next Cen­tral as the wave of head­quar­ters econ­omy sweeps across megac­i­ties like Bei­jing, Shang­hai and Guangzhou.

Galpin agrees that there is no doubt the num­ber of big multi­na­tion­als choos­ing to have of­fices in Bei­jing and Shang­hai will con­tinue to grow.

But a ge­o­graph­i­cal edge and a closer link with global lead­ing fi­nan­cial cen­ters like Lon­don and New York helps Hong Kong earn a slightly higher score, he added.

He also pointed out that an­other no­table ri­val in the re­gion, Sin­ga­pore, a state that “shares many of the strengths of Hong Kong — its low tax econ­omy, low rates of cor­rup­tion, its rule of law”, is among com­peti­tors keep­ing Hong Kong on its toes.

“Sin­ga­pore is re­ally is a good stag­ing point for In­done­sia and some of the Southeast Asian economies. But it’s quite a long way away from Bei­jing, from Tokyo, from Seoul. So for com­pa­nies that want to have a sin­gle base to cover both north and Southeast Asia, Hong Kong has a bit of ge­o­graph­i­cal ad­van­tage.”

“I think Hong Kong will be less im­por­tant as sim­ply a place to man­age op­er­a­tions in China but more im­por­tant for man­ag­ing global con­nec­tions and global op­er­a­tions, ” Galpin said.

Four years ago, US con­glom­er­ate Gen­eral Elec­tric Co set up its global growth and op­er­a­tions head­quar­ters in Hong Kong, to man­age of­fices in Asia, Europe and Africa.

And In­finiti, the pre­mium brand of Ja­panese auto maker Nis­san, re­lo­cated its global head­quar­ters from Ja­pan to Hong Kong in 2012, spurred by an­tic­i­pa­tions of fur­ther growth in luxury de­mand on the Chi­nese main­land.

“And even big com­pa­nies from Europe like Sch­nei­der Elec­tric have taken ad­van­tage of Hong Kong’s global reach,” Galpin said.

An an­nual sur­vey by the Cen­sus and Statis­tics Depart­ment shows that the to­tal num­ber of firms with par­ent com­pa­nies over­seas and in the main­land reached 7,585 in the past year, up by 1.8 per­cent over 2013.

And more than a fifth of the 3,784 com­pa­nies that serve as re­gional head­quar­ters or of­fices in the SAR were con­fi­dent about their prospects and in­di­cated that they may ex­pand their busi­ness in Hong Kong over the next three years. Con­tact the writer at selena@chi­nadai­lyhk.com


Simon Galpin, direc­tor-gen­eral of in­vest­ment pro­mo­tion at In­vestHK says rapid growth in Asia, par­tic­u­larly the Chi­nese main­land mar­ket, and the flat­tened economies of North Amer­ica and Europe are driv­ing en­trepreneurs with global am­bi­tions to Hong Kong.


Simon Galpin, direc­tor-gen­eral of in­vest­ment pro­mo­tion, In­vestHK While there may be fears in some quar­ters that ris­ing costs of com­mer­cial space may drive busi­ness away, it is an in­dis­putable fact that Hong Kong of­fers a range of dif­fer­ent op­tions at very dif­fer­ent prices within a small area.

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