Hong Kong has a lot going for it — economic strength, stable currency, prime location and a top financial industry. However, the territory has yet to rise through the global tech center rankings. This week, in our Tech Center Roundup series, we take a look at Hong Kong’s tech center potential and what it needs to solidify its place as a startup accelerator.
In this week’s edition of PYMNTS’ Weekly Tech Center Roundup, we travel to Hong Kong to explore the fast-growing tech ecosystem and see why, despite its potential, it still seems to be a tech center underdog.
Before we jump into the post, here are a few quick facts about Hong Kong and its tech scene:
- Hong Kong is estimated to have a population of 7.3 million.
- The city’s GDP per capital is $54,722.
- As of 2015, Hong Kong was home to approximately 1,558 startups, a 46 percent increase from the year prior.
- Hong Kong is known for its simple and predictable tax system, making it an attractive place for investment.
- The city is revered for having the “world’s freest economy.”
Hong Kong has got it going on.
It’s got almost everything you’d think is needed to support a fast-growing startup ecosystem — market openness, practical economic policy, a stable legal environment and a well-connected location. Not surprisingly, Hong Kong earned a reputation for its standing as a global business and financial hub.
But many have come to question its ability to be a place that can also foster entrepreneurial growth.
Despite economic strengths and what many describe as a pro-business environment, Hong Kong has continued to see its tech startup ecosystem fall short of breaking into the top 20 global startup landscape rankings.
The “Hong Kong Startup Ecosystem Report” from Compass suggests that Hong Kong is fully capable of developing a strong tech startup ecosystem, but for now, it remains in the early development stage and still has a long way to go before it becomes self-sustainable.
The analysis suggests a range of both short- and long-term priorities Hong Kong should take in order to grow its startup landscape, including improving the availability of top talent, boosting the investor community and continuing to increase entrepreneurial activities.
According to FinTech accelerator tryb, despite the fact that there’s been an estimated $300 million in FinTech funding in Hong Kong, many of the startups in the industry face tough challenges when trying to get off the ground.
FinTech startups in particular must jump through tough regulatory hoops, making it difficult to establish payment firms, crowdfunding platforms, peer-to-peer lending schemes and even obtain secure operating licenses.
But that doesn’t mean Hong Kong’s startup scene is without hope.
Artificial intelligence accelerator Zeroth.ai announced its plans to help AI startups in Asia gain global attention. Established by a Hong Kong-born venture capitalist, the accelerator will partner with tech influencers from around the world to provide mentorships to the startups within its program.
“I don’t think it should only be companies like Google, Facebook or Baidu wielding AI superpowers,” the company’s founder, Tak Lo, told South China Morning Post. “All the big companies are buying up AI talent because there’s clearly not enough in the market. Only after we’ve achieved a critical mass of people that are actually experienced in AI technology … can we start seeing the technological advances that I think we have always wanted,” Lo added.
Hong Kong’s nature of being a springboard into the Chinese market has helped it to attract the attention of Israeli startups.
Hong Kong Economic Journal reported that the city’s free flow of information, business landscape and simple tax regime may be why Israeli firms are looking to set up offices or move their region headquarters to Hong Kong.
“China’s market is very crucial to Israeli companies. Small companies don’t have the resources and time. A Hong Kong partner can help them understand the mainland market and search for the right counterpart in China for distribution and manufacturing,” Sagi Karni, Israel’s consul general to Hong Kong, said.
“To a lot of foreigners, Hong Kong is a very important gateway to China,” he added.