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Monday, July 11, 2016, 22:49

With passion, startups can still make the grade

By Lin Wenjie

Car-hailing platform Didi Dache and drone-maker Da-Jiang Innovations are the two winners that stand out among thriving entrepreneurs on the Chinese mainland.

But, entrepreneurial activities in Hong Kong, compared with the proliferation of startups across the border, seem mundane, with no single company having made a name for itself despite the city’s well-established legal system, rock-bottom corporate taxes and abundant government funds.

At the 2016 Global Young Chinese Innovation and Startup Forum held in the SAR last month, the panelists, including some working for government-backed organizations, told youngsters to start a business, while pointing out the city’s problems in the race to be the region’s innovation center.

“Now’s the best time to start a business in Hong Kong,” says Duncan Chiu, president of the Hong Kong Information Technology Joint Council, noting  that innovation is the prime driving force in the city’s future development. “However, we still face some obstacles.”

The biggest problem is the lack of funding for budding enterprises. “Although Hong Kong investors have enough money, they’re reluctant to pump money into immature companies. They prefer to invest before initial public offerings, so we need to fill this financing gap,” says Chiu, urging investors not to overlook long-term returns while focusing too much on the short term.

“The backing power is also important. Hong Kong’s Growth Enterprise Market (GEM) originally aims to support startups, but there’s only a small proportion of startups listed on it. The Securities and Futures Commission now plans to review the listing rules to make the GEM more attractive to technology companies. We will wait and see,” he says.

A dearth of motivation among young Hong Kong people is another setback. “Hong Kong is a vibrant place with talents from all over the world, but their innovative spirit is blocked by a lack of passion,” reckons Cheng Yan, executive director of Huarong International Financial Holdings.

“The SAR government has done a lot to attract and train talents, but how to take advantage of their talents remains a problem for the government to sort out,” Chiu adds.

In his 2016-17 Budget speech, Financial Secretary John Tsang Chun-wah announced the setting up of a HK$2-billion Innovation and Technology Venture Fund to co-invest with private venture capital in local tech startups.

The government has also pledged to fork out another HK$2 billion to set in motion a Midstream Research Fund to back up University Grants Committee-funded universities in carrying out more midstream and translational theme-based research.

It has further asset aside HK$200 million to launch the Cyberport Macro Fund for investing in information and communications technology startups.

All these efforts are in response to the notable burgeoning of startups in Hong Kong. According to a survey by InvestHK -- the city’s investment promotion agency -- there were 1,558 startups in the city as of August last year, representing a 46-percent, year-on-year growth.

Instead of trying to earn a place in the global entrepreneurial community, some experts have suggested that Hong Kong position itself as a bridge between Chinese mainland startups and those overseas.

“It’s better for Hong Kong to serve as a springboard by helping mainland startups to go out and introducing foreign companies into the mainland,” Joanna Cheung Wai-sze, co-founder of TGN Innovation, tells China Daily.

“As many mainland startups take shape, they want to find potential overseas markets, and Hong Kong is the first station in their global foray,” she says.

TGN is a cross-border services company for startups, a brand under the Stated-backed Tus-Holdings. TGN is building up its network in Asia and Silicon Valley in the US, providing co-work space and all-round consulting services.

Cheung is confident about Hong Kong’s young entrepreneurs eventually making the grade, advising them to take advantage of the city’s position as a world financial center, focusing on industries like financial technology and smart city building.

“I’ve seen some changes in the mindset among young people in Hong Kong. When they start a business, they now target both the mainland and Hong Kong instead of solely relying on Hong Kong,” she says. “I hope to see someone born and raised in Hong Kong creating a company that will be known to the world soon.”

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