Total Entrepreneurial Activity Average= 4.9%
  • Hong Kong has a relatively low level of entrepreneurship, which is surprising considering high levels in mainland China.
  • The level of entrepreneurial activity is historically very stable.
  • Two in every three entrepreneurial pursuits are opportunity based and tend to be in export/import and consumer oriented businesses.
  • Approximately 70% of start ups fail within the first five years, which is on par with the USA.
  • There are strong correlations between higher education and willingness to take the risk of starting a new business, however the majority of these business are not using innovative technologies or selling new products and services.
  • Most of the business start ups focus on capturing market share in North America and Europe.
  • Special Administrative Region status with China strategically positions businesses to serve foreign enterprises seeking to enter the Chinese market; and Chinese businesses trying to tap into global markets.
  • Major playing in the Global Supply Chain network.
  • Economic growth is approximately 6.1% based on it GDP.
  • Obtaining financial support through institutions and formal investment entities is difficult.
  • Most new business are funded by owners, family members or friends  due to: High personal savings rates, cultural norms, wealthy ageing population and a preference for low to no interest rates on capital.
  • Secured loans are available to new businesses, however the application process is tedious and usually based on significant collateral and interest rates are about 6.5% per annum.
  • Venture capital is virtually non-existent in Hong Kong, however, once a firm is ready for the Initial Public Offering (IPO) phase there is considerable opportunity for capital infusion.
  • Excellent infrastructure
  • Ample educated, English speaking and flexible human resources
  • Regulations are transparent and easy to navigate
  • 0% average tariff rate and they do not restrict foreign direct investment.
  • No capital gains tax, so investors can keep all their gains in a venture.
  • Bankruptcy and insolvency regulations allow a firm to exit a failed endeavor.
  • Hong Kong’s has an economic freedom rating of 83%.
  • Government has educational/training initiatives for cultivating entrepreneurial activity
  • Easy to start a business in 11 days and you can register the company within a month starting operations.
  • Simple/transparent  tax code, low tax rates
  • One of the least corrupt legal systems in the world with strong protections for individual rights and property rights. They have established intellectual property rights, although they do need to improve enforcement.
  • Cultural values entrepreneurship – it is seen as the only real way to achieve significant wealth, they respect people that bootstraps and do not stigmatize people for failure.
  • Women are not discouraged from pursuing their own businesses, although the majority of the female entrepreneurs have entered into “female-oriented” sectors (clothing, beauty products, etc.)
  • Does have a high cost base, inadequate links between R&D and the market retard entrepreneurship, high fears in taking risks.

Souce: http://www.internationalentrepreneurship.com/asia_entrepreneur/hong_Kong_entrepreneur.asp

My comments: Some facts listed above may or may not correct. That’s not the point. The key point is, as an entrepreneur, whether you are aware of or not, you compete in clusters rather than individually. You or your firm have a larger chance to succeed if the cluster, in this case Hong Kong, is getting better. (Btw, I think Startup Monday is a great step forward. Thanks those who initiate the gathering). You idea maybe more likely to get funded if you are in Silicon Valley. However, even if you are in Silicon Fen, Hsinchu/Taiwan, Zhongguancun/Beijing or here in Hong Kong, as long as you understand the strength and weakness of the cluster and know how to play with it, you probably have a equal chance to succeed.
My further thoughts:

  • What are main weaknesses of HK cluster? High cost-base? Limited market size (even your product/service achieve scalability)?
  • What are main strengthes of HK cluster? geographically close to a huge booming consumer market?
  • What are the opportunities for HK cluster? Shenzhen cluster, one hour drive from your place, stand several internet/technology giants in China. Among them, Tencent(QQ) and Huawei. Chinese Nasdaq recently opens up in Shenzhen. The city is also a nationwide center for RMB-denominated Venture fund and has a very low R&D cost base.

I am sorry for throwing out many unorganized thoughts but would be very happy if you find some pieces are helpful. Your comments more than welcome! I won’t be able to join next Monday’s meeting due to travel but wish you all enjoy it.