Hong Kong’s bid to be a world technology hub, favorable policies and Greater Bay Area integration have spurred a dramatic surge in the number of startups in the city in the past few years. Zhang Tianyuan and Liu Yifan report from Hong Kong.
File Photo of the Hong Kong Science and Technology Parks. (PARKER ZHENG / CHINA DAILY)
The Hong Kong Special Administrative Region has forged a robust entrepreneurship and innovation ecosystem in the past 25 years — with promising prospects and blessed with an abundance of talent, proximity to the Chinese mainland market, funding programs and favorable policies.
Riding high on its goal of becoming an international technology hub, Hong Kong has seen the number of startups in the city having almost quadrupled to 3,755 last year from about 1,000 in 2014, while venture capital investment surged to HK$41.7 billion ($5.3 billion) from HK$1.24 billion during the same period, based on official data.
Hong Kong has witnessed the birth and development of 18 unicorns across the technology and innovation sector, including high-end manufacturing, robotics and financial technology.
The 2021 Global Innovation Index, published by the World Intellectual Organization, ranked Hong Kong among the top 15 of some 130 economies.
Hong Kong’s low tax structure and supportive policies are favorable for the growth of tech startups, said Terence Chong Tai-leung, an associate professor at the Chinese University of Hong Kong’s Economics Department and executive director of the Lau Chor Tak Institute of Global Economics and Finance.
“Free capital flow is also attractive as it makes it convenient for these companies to expand their cross-border operations,” he said.
Jonathan Cheung, co-founder and CEO of startup Inovo Robotics, said Hong Kong has sufficient academic talent to support the development of innovation and technology as the city is home to five of the world’s top universities.
Five academies from Hong Kong’s tertiary educational institutions — the University of Hong Kong, the Hong Kong University of Science and Technology, the Chinese University of Hong Kong, City University of Hong Kong and the Hong Kong Polytechnic University — were listed last year among the world’s top 100 universities, according to QS World University Rankings.
Strong incentives
Cheung said he was attracted by the SAR’s geographical proximity to cities on the mainland, as well as its efficient supply chain, low-cost manufacturing, and the city being a “visible market with great potential”.
Inovo Robotics, headquartered in the United Kingdom, opened an office in Hong Kong as its Asian base, offering automotive tools that can perform repetitive tasks for various kinds of businesses.
Ricky Chiu Yin-to, founder and CEO of Hong Kong-based Phase Scientific International, agreed that Hong Kong has a “strong foundation in academia”, with the Guangdong-Hong Kong-Macao Greater Bay Area offering all the elements a startup needs to thrive.
Eyeing the opportunities in the Greater Bay Area, Chiu said Hong Kong still isn’t the end point of his medical diagnostic products company.
The HKSAR government has injected more than HK$150 billion into the inno-tech sector since 2017 through diversified initiatives. The city’s 2022-23 Budget said the government would allocate HK$10 billion for the Future Fund to support businesses with growth potential and HK$16 million for local universities’ research and development.
Wang Jun, CEO of Hong Kong-bred unicorn GeneHarbor, recalled that when the company was founded in 2004, he already had the technology resources to develop their products from the Innovation and Technology Fund provided by the Innovation and Technology Commission.
“Our company had also benefited from the Research Talent Hub during the early stages of its growth, as well as the Elite Programme,” he said. The Research Talent Hub grants direct funding of up to HK$32,000 to each eligible professional working in a startup, while the Elite Programme, sponsored by Hong Kong Science and Technology Parks, offers fast-growing enterprises with funding of up to HK$21.5 million to spawn their businesses in the international market.
The direct funding programs in marketing and highly-skilled professionals have enabled the anti-aging products producer to use much of the capital on research and development, according to Wang.
Innovation ecosystem
With the aim of making itself a global innovation and technology hub, Hong Kong is ramping up efforts to bolster technology applications in various sectors. A landmark was reached in 2020 as eight virtual banks went into full operation, delivering financial services entirely online with no physical branches by virtue of emerging technologies.
Backed by Hong Kong’s vibrant innovation and technology landscape, virtual banks have gained momentum in business expansion, said Ari Zhou Ming, executive director and chief executive of Fusion Bank — one of Hong Kong’s eight licensed virtual banks.
Headquartered in Hong Kong, Fusion Bank has become a favorite business project among private investors. Apart from Shenzhen-based internet giant Tencent Holdings, other shareholders include Hong Kong Exchanges and Clearing and property tycoon Adrian Cheng Chi-kong.
The Hong Kong Monetary Authority rolled out the “Fintech 2025” strategy last year to spur the city’s financial sector to comprehensively adopt technologies, such as artificial intelligence, blockchain, cloud computing and big data.
Hailing the “multi-pronged measures” Hong Kong has taken so far, Zhou said he is confident about the city’s business prospects. “The SAR government had set up InvestHK — the official body responsible for attracting foreign direct investment. This has helped Hong Kong carve a place in the national fintech ecosystem that will further consolidate its position as a world financial center.”
With Hong Kong’s rapid integration with other cities in the Greater Bay Area, and the expansion of cross-border investment channels, there are abundant opportunities for technological innovation in the future, said Zhou.
Apart from creating official bodies like the Innovation, Technology and Industry Bureau, the HKSAR government established Hong Kong Science and Technology Parks Corp and Cyberport as incubators of startups to accelerate technological innovation and commercialization.
Given its well-established innovation landscape and status as a leading financial center, Hong Kong is seen as a popular tech hub to develop businesses, according to a report released by the FinTech Association of Hong Kong, which surveyed more than 70 tech-related companies involved in activities that include artificial intelligence and big data. Up to 70 percent of the respondents regard Hong Kong as their top market, with more than 80 percent of them planning to increase their headcounts in the city.
Hong Kong Financial Secretary Paul Chan Mo-po is beaming with confidence, saying Hong Kong’s innovation ecosystem has become increasingly mature and is ready to contribute more to the city’s economy and competitiveness in the next few years.
Contact the writers at tianyuanzhang@chinadailyhk.com