When my senior partners and I decided to start a web based technology business for the financial sector, the obvious choice for us, and not just because we were already living here, was Hong Kong. Our website www.asia-first.com provides a range of electronic distribution and consolidation capabilities focused on news, content, data and information management.
Our platform enables our clients who are made up of financial institutions, service providers and financial professionals to purchase and better manage their financial information products and news services. The Asia First platform also helps Financial Services Companies, Banks and Asset Managers distribute their financial information, content, research and whitepapers to a more targeted and focused audience.
For those of you reading who are unfamiliar with Hong Kong, we have a population of over 7 million people, but because of the small size of the territory makes Hong Kong one of the most densely populated places in the world. It’s however also best known for its thriving economy and being a financial hub in Asia.
This city is the business gateway to Asia and particularly China. The financial sector in Hong Kong is one of the largest areas which fitted well with our plan for business, market and our customer base.
Over recent years, other areas such as the real estate has started to cool down, but we have still seen influx of mainland new wealth pumping investment capital into this sector which has kept the bubble afloat.
This however hasn’t deterred new entrepreneurs from setting up shop in Hong Kong. Most notably, tech businesses have popped up and some even relocated to Hong Kong. Many of these having their headquarters here.
But what are the benefits of launching a tech startup in Hong Kong as opposed to other cities in the world?
English is the language of business
Being the global language of business, many entrepreneurs expect to launch their businesses in a city where English is widely spoken. Hong Kong provides a perfect location. Majority of the skilled professionals in the city speak English. This means that you won’t have to employ expatriates from English speaking countries which might be expensive. Launching a tech startup in an environment where English is spoken as the language of business also provides the advantage of easy networking with potential business partners.
With a population of over 7 million people, Hong Kong provides a ready and large market for tech products. The people of Honk Kong are known to embrace technology fast and this is evidenced by the fact that the city is one of the most advanced in terms of information technology. According to the World Economic Forum Networked Readiness Index of 2013 the city was ranked number 14 among cities which are considered ready to embrace and participate in the development of ICT. Besides the 7 million people residing in the city, there is a 1 billion plus market in mainland China.
Efficient and low cost company registration
Registration of a tech business or any company and opening a bank account in Hong Kong takes an average of 2 days provided all required documentation is submitted correctly. This is unlike mainland China where registration can take months. In addition, the average cost of setting up a Hong Kong Special Purpose Vehicle (company based in Hong Kong) averages at $250 which is quite cheap compared to other cities in the world.
Easy windup of startup company
Although not the objective of any startups, it might be necessary to close or sell the company. In Hong Kong, it takes as little as one day to finalize the company’s operations. Mainland China is much more different where it can take well over six months.
Hong Kong is known for its straightforward and simple tax regime. Launching a tech startup in this city exposes the business to a profits tax cap of 16.5%. There aren’t complex taxes such as withholding tax, tax on dividends and, capital gains tax. This makes it the perfect environment to start and grow your business. In addition, it is the duty of the business owner to file their tax returns. This means there’s little government interference as far as audits are concerned.
Incubator and accelerator programs
Incubator schemes are the driving force behind many tech startups in Hong Kong. The Hong Kong Science and Technology Incubator program is designed to provide support for tech startups to enable them get off their feet.
Some of the services provided include the following. First, it provides free or subsidized office space for startups for up to three years. This helps the tech startup avoid high rent costs during initial stages of the business. Hong Kong is known for its high rent rates.
Second, the scheme provides consultancy services for startups allowing them to get necessary information needed to effectively run their businesses within the city.
Third, tech startups can benefit from investment matching where they can receive interest free loans to build on their capital and run operations effectively. Finally, the scheme also provides financial aid to help tech startups in their marketing and research and development.
Venturetec Accelerator is the first startup accelerator in the Asia Pacific region exclusively focused on connecting startups and corporates to build disruptive enterprise technology solutions. They aim to invest in over 60 early-stage startups over the next 3 years. Thier program offers a 6 Month Accelerator Program, Seed Funding $50,000 AUD, Access to Enterprise Customers, Global Mentor Network, Global Virtual Program, Investor Roadshow to Silicon Valley, Intensive Learning, Post-Accelerator Business Support
NEST is a Hong Kong Incubator, NEST’s typical investments are in early seed or startup phase companies. Ideally you have a product and a customer but this is not vital. The startups generally have a disruptive element and the ability to scale rapidly. They can be from anywhere in the world and NEST aim’s to power these startups up via their base in Hong Kong, China.
Every three months NEST holds a ‘Pitch Day’, where budding startups pitch their businesses to a panel of Nest specialists. Over a period of three months, selected companies receive upwards of US$200,000 in return for equity, which typically ranges from two and ten percent. In addition to capital, startups obtain a weekly strategy meeting, an experienced mentor from an industry-relevant external corporate, and a weekly management event with the other startup founders throughout their eco-system. Nest aims to remove many of the administrative elements surrounding building a company by providing in-house legal, accounting, HR support and assistance with company structure and documentation.
InvestHK (StartmeupHK Venture Forum) the StartmeupHK competition is an annual venture programme that InvestHK holds. It has received more than 500 entries at the beginning, and this year had 12 finalists who were selected to compete in a Grand Finale. Industries covered include technology, ICT, Business Service etc.
Related: How To Minimise Startup Risk
Hong Kong has some excellent local web, mobile and technology development firms if you are looking for a design or development company. We use digital butter who provide a range of creative services like web design and development.
Flexible visa policies
One of the benefits of launching a tech startup in Hong Kong is the city’s flexible visa policy. While mainland China requires visitors to have a visa to work or conduct business in the country, Hong Kong is a different case. You can enter into the city visa free for up to 180 days. What this means is that with an entry permit or visitors visa, you can easily go to Hong Kong, register your startup and open a bank account and start operations as you seek an investment visa.
Protection of intellectual property
Hong Kong’s government strongly supports that protection of intellectual property. You don’t have to worry about setting up your tech company and having intellectual property such as copyrights, patents and licenses revoked or stolen. This is unlike mainland China which uses a first to file regime where if you try and register an intellectual property such as trademark and it’s already taken, you’re not eligible.
No government censorship of the internet
Mainland China is known to censor websites in the country through the government’s Golden Shield. Some popular websites such as Facebook are actually banned in the country. Hong Kong on the other hand doesn’t censor websites and most websites that are popular in the rest of the world are allowed in the city. As such starting a tech company is quite easy without government interference.
Hong Kong is one of the cities in the world known for safe and secure banking. In addition banks in Hong Kong hold multiple currencies. What this means is that your bank account can be quoted in a currency other than the HK$. This is unlike mainland China where accounts cannot be held in multiple currencies. The banks are also quite flexible as far as currency transfers are concerned. For the tech startup, this is great as you can have the business’ account quoted in the currency of choice.
Over recent years, tech companies from the west have been coming to Hong Kong and setting up shop here. There are numerous benefits compared to mainland China and other countries where government restrictions and high taxes restrict efficient business growth and development. If you are considering launching a tech startup, Hong Kong is definitely one of the places in the world worth considering.
From the web: How I Opened A Branch Office Of My Business In Hong Kong
Do you have a Hong Kong based startup or thinking about starting up in Hong kong?