A long-standing, rich and historic reputation for business is Hong Kong’s ultimate asset. Mixing a tradition of trade with an energetic populace driven by the promise of opportunity, the city thrives on commerce and regeneration. That’s why the biggest names in global finance and industry pepper the cityscape.
For the past 23 years, The Heritage Foundation, a Washington think tank, has ranked Hong Kong first in the world for economic freedom. Hong Kong is also ranked number one in the IMD World Competitiveness Center’s index. Professor Arturo Bris, Director of the IMD Center, says, “a consistent commitment to a favourable business environment was central to China Hong Kong’s rise”. The IMD report goes on to cite innovation through low and simple taxation, and picks up on the lack of restrictions on capital flows in and out of the city.
Where money flows freely and competition thrives, the city attracts global companies looking to float.
This year, PricewaterhouseCoopers expects Hong Kong to rank as the number one choice globally for taking companies to market.
It estimates that 130 companies will raise up to HK$220 billion (US$28 billion) on the Hong Kong stock market in 2017, up 13 per cent from 2016.
Direct access to China’s one billion-plus consumers and billions in investment offers a robust platform to Hong Kong. The numbers show that in the past 20 years, even with the challenges that most economies face, the “one country, two systems” model has allowed Hong Kong to flourish.
Since 2003, the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) has helped expand Hong Kong’s services market, and allowed tariff-free entry for Hong Kong manufacturers, into the China market. Recent initiatives to establish bond market access between Hong Kong and the Mainland of China, and connect the Hong Kong stock exchange to those of Shenzhen and Shanghai, along with the ongoing development of the offshore Renminbi business have consolidated Hong Kong’s position as China’s global financial centre.
Apart from traditional strengths in finance, business services, transport and logistics and tourism, Hong Kong has in recent years witnessed a boom in innovation and technological advancement.
At the Chinese University of Hong Kong, a research team is hoping to create clean fuel with water after discovering that exposing H2O to red phosphorus produces hydrogen bubbles. Professor Jimmy Yu, who runs the project, and holds several patents, was named by Thomson Reuters as one of the “World's Most Influential Scientific Minds” in 2014. Could he and his team develop a reliable answer to fossil fuels?
Of course, funding research and development, solving the world's problems, requires significant investment. Six universities are given annual funding of up to $4 million (US$513,000) each by the Hong Kong SAR Government’s Innovation and Technology Fund to spend on startups.
Elsewhere, renowned drone maker DJI, based in Shenzhen, salutes Hong Kong’s investment in people and facilities. Founder Frank Wang Tao started out as a Mainland Chinese graduate of the Hong Kong University of Science and Technology. His firm is now a globally recognised success story and has since launched DJI’s near 2,000 square-meter lab at Hong Kong Science Park in 2015.
Hong Kong startups are not just home grown and the city is attracting a huge number of entrepreneurs from overseas thanks to supportive government initiatives.
“If you don’t set up your own company in Hong Kong, you don’t do it anywhere else in the world,” says Karena Belin, the founder of WHub, a startup ecosystem. “Hong Kong has a great infrastructure for doing business. It leverages a long history in international trade and has developed into one of the most important logistic centres and finance hubs in the world.”
Hong Kong has found its place on the global startup map thanks to an impressive growth, becoming one of the 5 fastest growing ecosystems in the world.- Karena Belin, Founder, WHub, Hong Kong
Dragon Law, which offers customised legal documents to law firms via bespoke cloud software, was founded in Hong Kong and now has offices in Singapore, Australia and New Zealand. CEO Daniel Walker praises the support that helped get the company going. “We are graduates of the Cyberport incubation scheme, which gave us access to great (and affordable) office space and subsidies for various expenses as we grew... there is a great community of technology business, and many of our neighbours are clients as well as friends,” said Daniel.
Starting up in Hong Kong is easy, and increasingly high net-worth individuals are willing to provide angel investment but ecosystems take time and energy to build. Jayne Chan knows that well. As head of “StartmeupHK”, part of InvestHK, the government agency for foreign direct investment (FDI), it is her job to support foreign startups and also introduce the idea of entrepreneurship to future generations. “We are regularly in discussions with the universities and to some extent even with schools to talk about entrepreneurship,” says Jayne. “We try and get them to develop courses to be more relevant to today’s startups rather than the larger conglomerates.”
For more than 20 years, Hong Kong has remained the freest economy on earth. Often described as a cultural melting pot, the city continues to be one of the easiest places in the world to turn ideas into rich rewards. A mix of geography, historical experience and local enthusiasm support those foundations. Building on the commitment to togetherness, opportunity and progress, in the world of finance and business, Hong Kong is certain to remain a place where ambition and drive can thrive.