Analysis | Silicon dreams: Can Hong Kong cultivate a successful start-up culture?

Local entrepreneurs, venture capitalists and government officials are determined for Hong Kong to be a key start-up hub, but many hurdles remain in the path to becoming 'Asia's Silicon Valley'

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Hong Kong's banking district, Central. The city is attempting to diversify from its key pillars of finance and construction with support for start-ups and innovation. Photo: Bloomberg

Published: 6:30am, 20 Apr 2015Updated: 7:43am, 20 Apr 2015

Technologically savvy, rich, minimally taxed, and with strong links to the world’s second largest economy without the restrictions and risks of doing business in China proper, Hong Kong seems ideally suited to being a major regional start-up and innovation hub.

And yet many insiders are wary about the future, pointing to competition from other regional hubs, lacklustre or misallocated government support, a conservative investment community and a deficit in talent that forces some businesses to outsource event the most basic tasks.

In his 2015 budget speech, financial secretary John Tsang Chun-wah was bullish about the city’s start-up environment and promised the government would do more to support it, including expanding the Hong Kong Mortgage Corporation’s micro-financing scheme and injecting HK$5 billion into the Innovation and Technology Fund.

“I hope to improve the ecosystem for local start-ups and technological enterprises to tie in with the general direction of moving our economy up the value chain and enabling local industries to diversify,” Tsang said.

Chief executive Leung Chun-ying has also pushed for the creation of a new government department to replace the disbanded Information and Technology and Broadcast Bureau, promising HK$35 million in initial funding. Though this plan has been largely placed on the back burner following opposition in the Legislative Council.

The value of promoting innovation is clear. A study by the Chinese University of Hong Kong and Google, released on Wednesday, estimated that the development of two per cent more newly registered Hong Kong businesses per year would create more than 338,800 new jobs and increase the city’s GDP by an additional 0.24 per cent in the next four years.