Hong Kong is a City known for its technological advances, for being a entreprenuer city and for having one the most strong economies in the world. Thus, Cristina Ventura is the Chief Catalyst Officer at the company The Lane Crawford and ambassador of our association in Hong Kong, she share with us the strengths, weaknesses and opportunities that the city offers as the main bridge of APAC.

What are the opportunities and threats, strengths and weaknesses of the ecosystem in HK?  

• Strengths:

Hong Kong name itself has an intriguing and magical story, as it literally means  ”Spice harbour” or “fragrant harbour.” The word Hong was the general English term for foreign trading establishments in China history, known as the most strategic location in Asia Pacific. HK is at the centre of Asia, a doorstep to China, core for Greater Bay Area initiative (GBA – 68M population and GDP of USD 1.5T) and it is benefiting from the One Belt One Road new initiative of the government. Hong Kong is the heart of the ecosystem that connects human and financial capital, through creating a network for key stakeholders in investment, entrepreneurs, corporates, academia and government with the highest concentration of High Net Worth Individuals in the world. 

 Hong Kong is ranked 5th in the VC and PE country attractiveness index, 70 of the world 100 biggest banks are based in HK, it is leading as top 5 IPO fundraising city since 2002, and it has 350 members in the HK Venture Capital and Private Equity associations. Hong Kong is the largest capital market in Asia with diverse financing channels including equity listing, syndicated loans, private equity funds and renminbi-denominated bonds. HK has the ability to do business within a clear and simple legal framework, it has great strength compared to most countries in the region, and there is an international mentality of the investment funds and corporations. Besides, there is a good ecosystem of innovation and entrepreneurship at the government level (CybperPort – HKSTP – Astri), that is extremely supportive and helpful. 

In terms of business practicality and easy access, in HK the corporate income tax is 8.25% for the first HKD 2M profit and 16.5% above HKD 2M profit, and 300% super tax reduction for the first HKD 2M on R&D expenditure. There is no capital gain tax, no withholding tax on investment, and no estate duty. Moreover, there is a reliable jurisdiction due to the one country two systems, following the UK common law and IP protection. And it is one of the top Financial Canters in the world, leading IPOs among the top 3 cities globally. 

Another advantage is that it is close to the manufacturing sourcing hub Shenzhen (45 min), which produces over 50% of the total tech manufacturing in the world, and it is part of the Pearl River Delta as the manufacturing hub for electronics, laser diodes, petrochemicals, machinery, motorcycles, lighting, auto parts, etc. Over 100 airlines operate flights to over 220 destination worldwide, including 50 mainland cities, and it is the busiest air cargo in the world.  

It is a multi-cultural and talent hub as well, with top notch universities, a mixture of locals, westerners and mainland Chinese talent. It is a city that welcomes everyone and makes you feel at home instantly, due to its diversity, multicultural approach, and openness to new cultures and ideas. Since the day I arrived 15 years ago, I always felt welcomed and at home, having the feeling that with clear purpose, passion, dedication, agility and hard work, you can make anything possible.  

• Weaknesses: the operational cost is very high compared to other countries in the world (rent, cost of living, salaries, etc.) and there is high competition, with more than 2,600 start-ups with 7M population.
• Opportunities: it is a dynamic market with access to meaningful capital. As a main gateway to Asia, the city enables the expansion of companies to China or other countries of the region. There is the presence of large corporates that are crucial for partnerships too, and is it the base city of many IPOs, hence there is a high chance to coexist with promising start-ups and HQ companies with whom to develop collaborations, partnerships and potential market expansion and growth.

 The growing Sectors in HK are: 

• Fintech: as a regional financial centre, HK has the advantage to become the fintech hub for the APAC region. The top 10 APAC fintech venture occurred in HK & China accounting for 90% of activity in the region. 
• IOT (Hardware) & Smart City: HK Government is continuously supporting the development of a Smart City. In the past few years (2015-2017) policy address, HK Government has put significant effort in IoT and Smart City. Geographically is close to hardware centre SZ and the PRD 
• AI & Robotics: Historically HK was a global manufacturing powerhouse. 5 out of 6 engineering schools in HK ranked global top 100. Its proximity to China, the largest and fastest robotics market, supports this growth. And the market attracts the best AI and robotics start-ups (e.g. Enlighten AI, Hanson Robotics, Sensetime).
• Threats: it is a dynamic market but might be challenging when you come from outside, as you need to understand the local ecosystems to gain traction. To think that the start and growth to China is easy, it is not realistic. It is crucial to be humble and learn from the local culture and its dynamics every single day, being open to new experiences and adapt to the incredible growth and find strategic local partners. To survive and thrive, you must be extremely fast, agile, have a positive and zest attitude, and able to take risks.