Startups in HK: how to succeed in a complex environment

Despite an attractive legal and financial structure, HK is a difficult place for startups. Indeed, startups aren’t part of the cultural mindset there; neither the government nor the workforce pays much attention to their economic potential. Only 1% of the HK GDP was used to invest in R&D this year. 

Several difficulties arise for entrepreneurs in HK

  • Raising capital in order to have sufficient liquidity to adapt to innovation and technology. Local authorities are very static and slow to react to an ever-changing environment. Entrepreneurs happen to be blocked in the middle: they have ideas, but aren’t backed by the HK government.
  • Having the right network in order to reach Mainland China’s market. This is crucial to succeed in HK as the 7 million people market there is too small. They need to reach the Mainland’s market, but they can’t do so without connecting with the right partners and investors. Raising capital isn’t enough for this because the bargain there is very different from anywhere else. Entrepreneurs will also need to implement successful strategies to succeed. Since the Mainland’s market is very specific and hardly understandable without some expert’s advice, entrepreneurs ought to surround themselves with professionals carefully chosen.
  • React accordingly to a cultural mindset that doesn’t promote entrepreneurship. Indeed, stable jobs are more prestigious in HK because they are better paid. Thus, HK is a specific market between the developed west and the emerging east; entrepreneurs must understand the Chinese market while keeping in mind western tastes that are deeply settled in HK.

Increasing HK startup’s popularity to attract investment would deeply help entrepreneurs settle as they are now blocked by a lack of structure and funding.

Reaching the Chinese market from HK

After registering at Hong Kong Special Purpose Vehicules (HKSPV) startups should set up a WOFE in China in order for the WOFE to make money in China and send it back to the HKSPV.


How about the cost?

Today’s opportunities

  • Hardware: this industry is blossoming in HK, with more and more success stories. What is now at stake is to find new ways to use hardware.
  • Education technology: with 600 million K-12 students in Asia today and families spending 40% of their income in education, this sector is booming and new.
  • Green technology: renewable energies and smart grids are ever trendier in HK. Kick-starter campaigns are quite popular in HK and can actually help raising funds.
  • E-commerce: opportunities have flourished within this fashionable sector, and must be further studied.
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