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Wednesday, May 25, 2016, 19:15

Many startups stuck in first gear, reveals survey

By Li Xiange

HONG KONG - Hong Kong's mobile apps industry is young and still struggling, according to a survey by a Hong Kong Institute of Education (HKIEd) research center.

The survey of 100 local companies carried out by the HKIEd’s Academy of Hong Kong Studies from April 11 to May 13 shows over half recording annual revenues of less than HK$500,000, said Brian Fong, associate director of HKIEd. Profits are down this year, with only 25 percent report they are in the black – down from 43 percent in 2015.

The majority of companies – 78 percent – have been in operation for less than five years, while 22 percent have been in business for more than five years.

Executive Director of the Hong Kong Wireless Technology Industry Association Wendy Yung said that given the fierce competition for conventional jobs, many fresh graduates choose to start their own companies. The satisfaction gained from their startups may make their work far more compelling than regular jobs, which may help to fuel the young entrepreneur trend, Yung added.

However, she cautioned that inexperience is likely an important fact in this year’s decline in profitability, with so many young entrepreneurs trying to break into the market.

About half the companies producing mobile applications were founded by people in their 20s, Fong observed.

Meanwhile, women are finding their place in the industry. Though male founders continue to dominate the picture, the proportion of women who have set up their own mobile app companies climbed sharply, from 14 percent last year to 23 percent this year.

Yung said the influx of female founders, coders and developers is a trend that will provide added momentum to the growing technology industry. But closing the gender gap and the pay gap between men and women in the IT sector still needs to be addressed, she added.

Mobile applications for iPhone’s iOS still dominate the market, but the percentage of companies producing iOS apps fell from 58 percent last year to 41 percent this year. Yung said this shift reflected a change in developers’ strategies to meet changes in the market. Android is taking up a greater market share as more Android-based services like Virtual Reality emerge, added Yung.

Fong noted that as the business environment grows increasingly competitive, development in new products and new platforms is necessary.

Startups tend to focus on the local market in the early stages, but they must look beyond Hong Kong, he said.

Yung referred to the SAR government’s increased efforts to support innovation and entrepreneurship. She said young entrepreneurs should work to learn about the process of acquiring government funds. She added many young entrepreneurs avoid applying for development funds in the mistaken belief that the process is too complex.

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