In an interview at the end of October last year with PBS Newshour, Steve Case, former Chief Executive Officer and Chairman of America Online, said that he believed startups were a necessary part of creating a healthy economy. Case claimed that they are vital in bringing down unemployment rates, improving economic growth, and ensuring healthy competition in the marketplace.
Meanwhile, in the United States, startups are clearly already playing a key role in the economy. Data from the country’s Bureau of Labor Statistics reveals that startups have created more jobs than the total number lost and gained by all US businesses since 1994.
Hong Kong has long been considered a global financial and cultural hub, but what is it like as a startup location? Last year, it was voted number 10 on a list of the best cities for expats by HSBC, with China taking the number one spot. The Atlantic magazine has also dubbed Hong Kong the “most business-friendly city in the world”.
Gregory So, the Secretary for Commerce and Economic Development of Hong Kong, last year, said, “Make no mistake, startups and entrepreneurs make significant contributions to Hong Kong. At a time when the world is facing ongoing economic uncertainty, we need new drivers to be able to generate economic growth, jobs and innovation in future.”
But there are a few reasons why Hong Kong is still flagging behind other key global locations, including what some see as the lack of a nurturing startup culture and expensive rentals.
On the plus side, Hong Kong has a wealth of talent, extremely low tax rates, and is geographically well-positioned for growth in China and Southeast Asia. There are also a growing number of small angel investors here, mainly people from the investment banking field looking to invest in a startup.
In an interview with Forbes in August last year, Paul Orlando, a Los Angeles-based startup consultant who spent a year helping startups in Hong Kong, observed that the startup scene there has changed dramatically in the last few years. Of his 2012 visit to the city, he said:, “It reminded me of New York in 2008 when the tech scene there was just getting started.”
Joshua Steimle, a startups and online marketing expert now living in Hong Kong, also writing for Forbes in August last year, said that there are still three main barriers for entrepreneurs in Hong Kong, which included the need to simplify the visa process, eliminate corporate taxes on new businesses, and increase publicity and awareness on the region.
Hong Kong’s strong corporate culture means that there are many people here interested in making money, in earning, and in proving themselves through having the best jobs possible. There are a lot of business-minded people, so socially it is easy to have business-oriented discussions, whereas in other places with less of a business culture it means there are also less people to share and bounce ideas off when you’re out of the office.
On the flip side, some people I have talked to believe that very same focus on money can be a problem because it makes it hard to find groups or individuals who will work on something in a way that is challenging without wanting rewards straight away.
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As a modern city, infrastructure is fantastic; it’s easy to find information, and no matter where you operate you’re going to have access to the services you need.
Chinese-English speakers make it accessible for expats, and locals are very open-minded to international ideas and ways of doing things. They understand there is an international market to compete in and are not simply domestically oriented, meaning the staff you hire already have that international competitive perspective.
That attitude can be incredibly hard to find in somewhere like Britain where a lot of the recruitment pool are more domesticated. In short, Hong Kong takes international interests very seriously.
But it can suffer from being a results-oriented culture that lacks the experimental edge often needed in successful startups. So it is not always easy to run experimental business models here, and especially hard to do with limited resources because everyone expects to be paid immediately. In somewhere like the US, there is more interest in non-profit projects or alternative payment options such as through equities.
The majority of the local recruitment pool is in sales and administration, and that can be a problem if you are a business looking to employ talent outside of those sectors.
Whether or not to attempt a startup in Hong Kong really depends on the person. People who have some kind of history with the city are ideal candidates because they have an understanding of the place, the people and the culture. It also better serves individuals and businesses who generally have cash and resources from the very beginning.
You need a tough nature and thick skin because it is easy to get hurt here in the early stages of your startup. If you don’t have those qualities, perhaps it would be better to look elsewhere.