How Hong Kong Will Lead the Way in Global Tech Development
For those who are interested in the next big thing for tech, take a look at Hong Kong.
The government has been pushing the city to be the next Asian hub for rapid tech development with a number of initiatives and funding that not only encourages local startups but also is meant to attract big players from overseas. Their efforts are working. Colliers, the global real estate and investment management company, nominated the city as its “wild card” pick in its list of top locations in Asia for technology. Tang Chibo, a managing partner at Gobi Ventures, a venture capital firm, also has a positive outlook on the potential of the city, saying that he can envision “amazing growth” in the next five to ten years. It would be “one of the key cities for innovation in China.” Let’s look at Hong Kong’s amazing progress.
Involvement with Greater Bay Area
One of the major advantages Hong Kong has to offer potential startups and international companies is its involvement with the Greater Bay Area plan. This is the Chinese government’s master plan to develop Hong Kong, Macau, and nine southern mainland Chinese cities into an integrated business hub for innovation and overall economic growth. Meant to eventually rival Silicon Valley, this ambitious development plan will give Hong Kong’s technology sector a great boost with the initiatives and government-funded research institutions that are to be tied to the plan. The city will be connected to the mainland through a nearly $20 billion 36km bridge and an $11 billion rail link that connects to China’s already expansive high-speed rail network. The goal is to create a cross-border, integrated single market.
Hong Kong/Shenzhen Innovation and Technology Park
Similar to the Greater Bay Area plan is the Hong Kong/Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop, connecting Hong Kong and major mainland tech city Shenzhen. Announced in January 2017, the new technology park will take advantage of Shenzhen’s quick innovation turnaround and cheap manufacturing while also utilizing Hong Kong’s internet freedom and business framework. Even without the park, the partnership between the two cities already has its innovation and technology sector ranked second largest in the world.
The government has been working on creating encouraging environments for technology development. The most notable being Cyberport in 1999 and Science Park which is part of the Hong Kong Science & Technology Parks Corporation (HKSTP) in 2001. The HKSTP also wholly owns the Hong Kong/Shenzhen Innovation And Technology Park. The government investment promotions agency, InvestHK, has also created StartmeupHK, an initiative aimed at encouraging tech startups from abroad to settle in Hong Kong. Don’t forget the growth of coworking spaces like WeWork and The Hive that have also been providing additional housing and workspaces for visiting entrepreneurs since 2012.
The government has also opened avenues for international tech talent to apply for fast-track immigration as well as a program to attract postdoctoral skilled workers. Companies like Facebook and Alibaba have even been expanding their offices in the city to accommodate growth. And not only can the city attract talent from abroad, but it can also be used to prepare products for an international audience. Hong Kong is seen as a “polishing place” according to Hong Kong entrepreneur Tim Lee. “Hong Kong’s regulatory, language and product requirements help you polish your products and get them ready for overseas markets.”
Future project to turn an idle piece of land in Lok Ma Chau Loop (between Hong Kong and Shenzhen) into the new regional tech hub.
Of course, none of this development and opportunity is possible without funding. Hong Kong’s financial secretary promised HK$50 billion for innovation and technology, with HK$20 billion of that reserved especially for the Hong Kong/Shenzhen Innovation and Technology Park. This past October, the HKSTP gave its tech tenants almost HK$7 billion that supported schemes like short-term rent exemptions and larger subsidies. In support of research collaborations with mainland China institutions, the government also has boosted its research endowment fund to HK$70 billion. The HK$2 billion Innovation and Technology Venture Fund, started last year, is encouraging venture capital firms to co-invest with the government in local, eligible startups. Hong Kong aims to raise their R&D spending to 1.5% of their GDP by 2022. As of 2015, the city has spent 0.73%.
Fintech is the way to go
Because of its position as an international finance hub, Hong Kong is also ready to lead in fintech development. A HK$500 million fund over five years was announced by Paul Chan, the financial secretary of Hong Kong, specifically for the development of financial services, including fintech. Investments in Hong Kong-based fintech are higher than ever at US$546 million, easily surpassing Singapore. According to the Colliers report, this kind of investment will lead to more fintech companies coming to the city that can afford the high office rent as well as international banks looking for more technology-skilled talent.
Hong Kong is on the edge of a truly impressive technological and economic revolution that promises so much for the future. Who knows, maybe in ten years, we’ll be talking about how everyone in tech is trying to find their spot in this exciting city.