Doing business in Hong Kong
Want a launchpad into Asia? Nick Giles makes the case for setting up shop in Far East challenger to Silicon Valley, Tel Aviv and Tech City – Hong Kong
Many would assume the British interest in Hong Kong came to an end 16 years ago, when governance of the region was formally handed over to China.
But as the Union Jack was being lowered for the last time in Wan Chai in 1997, another Brit was rolling up his sleeves in the region. As the governors departed, the entrepreneurs were arriving.
Simon Squibb, who came to Hong Kong that year, is founder of creative agency Fluid, which boasts a roster of international blue chip brands.
Active in the Hong Kong entrepreneur community, his latest venture NEST is a hands-on investment incubator in the heart of the bustling Sheung Wan district.
I met him last week as part of StartmeupHK, a week-long celebration of start-ups comprising dozens of events, mentoring sessions and the final of a major international venture competition. Organised by Invest Hong Kong, the festival saw hundreds of firms – both local and international – gather to talk up Hong Kong’s credentials as the most attractive place to start or grow a business in the whole of Asia.
Building a start-up ecosystem
NEST is one example of how a start-up culture is thriving in Hong Kong. Focusing on scalable consumer businesses – from restaurant recommendation apps to social photo sharing services – it provides space, investment, coaching and hands-on support such as the ‘MBA in a week’ training course for budding entrepreneurs which was underway when I visited.
“NEST’s target investments are typically seed or start-up phase companies between 6-18 months old consisting of an owner or founder and between three and eight employees,” Squibb told me.
As well as capital NEST provides technology, space and practical help to harness innovation with the overarching intention of making Hong Kong a global enterprise hub. It’s an ambition shared by the Hong Kong government, which last week rolled out the red carpet for the world’s entrepreneurs.
Charles Ng, associate director general at Invest Hong Kong, and the man responsible for StartmeupHK week, is confident about Hong Kong’s offer – unparalleled access to the Chinese market, a soft landing for international firms looking for an Asian base, UK common law, high literacy and education rates, not to mention the region’s obvious lifestyle attractions.
“Hong Kong has 50 million visitors each year with 60% of those coming from mainland China. We also have the largest number of ultra high net worth individuals of any city in the world other than New York and $57bn in retail sales each year.”
Ng added that Hong Kong is a potential beachhead to China and the Asian continent, with the Pearl River Delta – a manufacturing hub the size of Ireland with 64 million people delivering economic output greater than Indonesia at US$962m.
Start-up co-work space
In the densely packed Hong Kong island an entrepreneurial revolution is underway with a host of brand new co-working spaces, incubators and start-up academies opening with the shared aim of helping early stage businesses thrive.
I visited five of 18 new spaces – Cocoon, The Hive, Paperclip, Wynd and the aforementioned NEST – and met many of the founders, all energetic ambassadors for Hong Kong’s budding start-up scene.
The team behind the newly opened Cocoon in Tin Hau is a true family affair. Maximilian (Max) Y.K. Ma, chairman of the Lee Heng Diamond Group and a high profile local businessman has financed the project run by Mr. Ma’s impressive son and daughter team, Theodore and Erica, who both studied at Stanford University in California before returning to bring a little of Silicon Valley to Hong Kong.
Launched earlier this year, Cocoon offers a co-working space where tech entrepreneurs can meet fellow start-up founders and 70% of its members are from overseas including the UK, France, Russia and the US. In a city notoriously lacking in space Cocoon is a luxurious 14,000 square foot.
Max Ma said: “Hong Kong was built on entrepreneurial activity that drove wealth and jobs but we lost our way over the past few decades with a focus on big banking and big industry. Many bright people are leaving banking now and looking to do something entirely new instead. Cocoon reflects our desire to revive the entrepreneurial spirit in Hong Kong and connect with other cities around the world.”
From banking to entrepreneurship
Michael Ma, no relation, is precisely the kind of young talent leaving banking to pursue a more entrepreneurial path.
Born in Hong Kong and educated in the UK with a mathematics degree from Imperial, he quit investment banking after 10 years working on IPOs and big M&A deals.
He has teamed up with a group of fellow professionals – a lawyer and an architect among them – to provide space for start-ups. His venture is Wynd, a compact but stylishly designed office space on Wyndham Street above Lan Kwai Fong in the heart of the Central shopping and business area.
With charming understatement, he confirmed that his first client after opening this summer was Uber, the fast growing taxi app that secured $258m from investors including Google Ventures to great fanfare earlier this year.
“We’re not just about local companies but we’re also looking to provide a base for international companies starting in Asia. Many want simple office space without the hassle or expense of renting in one of the prime districts. We can offer a flexible and cost effective way to have a base in the heart of Hong Kong.”
In addition to these entrepreneur-backed spaces, the Hong Kong government has invested heavily in Cyberport, a tech accelerator on a grand scale with over 6,000 occupants, backed by Microsoft and IBM among others.
Science and technology growth
Then there is the impressive Hong Kong Science and Technology Park – the centre for research and development in Hong Kong – where start-ups are offered subsidised office space, and support services in marketing, finance, technology and management.
Critics have said that co-working space alone does not beget a vibrant start-up environment and it is true that Hong Kong is still looking to emulate the more advanced ecosystems of Silicon Valley, Tel Aviv or even Tech City. This is undoubtedly a nascent scene, but with such a robust business infrastructure, it is unlikely Hong Kong will take much longer to catch up.
I lived in Hong Kong in the mid nineties and the pace of change here is remarkable – from the world-class infrastructure sprouting all around to the new skyscrapers, five star hotels and luxury shopping malls dotting the waterfront.
For British businesses inspired by the prime minister’s trade mission to China last week or those simply looking to branch into Asia, Hong Kong is on the move and a better place to start a business you couldn’t hope to find.
Nick Giles is co-founder of the campaigns business Seven Hills and UK ambassador for Invest Hong Kong’s StartmeupHK programme
Picture source: Flickr