On August 7, X-HUB TOKYO, which supports overseas expansions of domestic startups, held a case study seminar on the business environment and business potential of Hong Kong and how to expand business there. Hong Kong continues to grow as the best startup ecosystem with a focus on ICT, IoT, Fin Tech, and more. We invited the Hong Kong Trade Development Council, which administers all of the events supported by the government of Hong Kong, and they gave lectures on the latest information on the Hong Kong and Chinese markets and the necessary processes and systems that can be used when expanding into both countries.
Current state of affairs of startups in Hong Kong
〈Speaker〉AI, Mr. Tak Lo, Zeroth, Founder
I am from Hong Kong, and also have an office in Tokyo. Basically, we are venture capitalists making investments all over the world. I have previous experience with the world’s largest accelerator program known as “Techstars.” About three years ago, we invested in 13 startup companies in Hong Kong.
And now, there are five startups in Japan we have invested in. We have invested in self-driving technology, Fintech, and Finance. These are some of the top investments in EMC’s portfolio. One of the reasons we are in Japan is because we believe Japanese markets and investors are fascinated by AI technology. A lot of things have happened in Hong Kong since 1967, and historical data and numbers show that Hong Kong is a tremendously resilient city. Over time, the city has come back to life and has had a prospering economy.
What I realized was that Hong Kong’s infrastructure is working 24 hours a day, seven days a week. The transportation infrastructure is cheap and reliable and runs from 5 in the morning until midnight. Communication infrastructure is amazing. LTE broadband services are easily accessible, and opening a bank account is a simple. The Greater Bay Area is another great point. The Greater Bay Area consists of 7 or 8 cities surrounding Hong Kong. Shenzhen, Hong Kong, Macau, and Zhuhai are located in this area. By promoting trade in this area among the cities, Hong Kong will increase its business potential with mainland China.
Ultimately, I believe that Hong Kong will have a major impact on international business and international startups.
The latest Hong Kong business information as told by a Japanese venture capital founder in Hong Kong
〈Speaker〉Mr. Jin Tanaka of Zeroth
From last December to March of this year, we held the first ever accelerator program. I believe that we can create the largest AI ecosystem in Japan and the rest of the world. AI founders and partners of Japan, KERNEL and DEEPCORE support various projects, and we make assessments of those projects. What we are doing in Japan is focusing on the accelerator program while having monthly meet-ups regarding the creation of an AI ecosystem.
I have always been a founder in startups, but I feel that dealing with infrastructure is a bit different. I think it would be interesting if firms and startups, banks, and the government worked together to create their own infrastructure. As an AI-related business, they are trying to create a new project with a “technology driven” philosophy. And since we are the founders, we can find problems easily and provide technical solutions from the users’ point of view. I think that we can revitalize the startup scene in Japan by communicating this information to major companies.
Attractiveness and utilization of Hong Kong as a hub for globalization
〈Speaker〉Mr. Takashi Hongo, Fringe Ventures
Currently I am based in Hong Kong. Before, I was in Boston. I would like to share my experiences and personal stories about doing business in Hong Kong, Boston, Singapore and Tokyo. I will also talk about what I think of Hong Kong as a hub for globalization and the utilization of Hong Kong.
Regarding Hong Kong, because it is only a four-hour flight from Tokyo to the Greater Bay Area, we should think of it as a single economic zone. We can combine both Tokyo and the Hong Kong area to create one huge economic zone. From the point of view that the economic sphere of Tokyo will no longer grow, it is very interesting to think of the possibilities that come from connecting these two areas through business. Also, going forward, from a business perspective, as a Global Entrepreneur deciding where to base one’s operations will become a serious issue. Selecting a location is very important, especially when considering Japan’s economic and political environments. Of those points, from an innovation ecosystem perspective, we must always think about where would be the most suitable place to base a business or startup.
Silicon Valley and New York are well known startup ecosystems. However, recently, Hong Kong has gained recognition as such as well. The reason behind Hong Kong’s recognition as a great startup ecosystem is that its startup success, global reach, global and local connectedness, and talent cost advantage are highly valued. Concretely speaking, there are many cases to show a high success rate in fundraising, the international sales rate is high as a percentage of GDP, and they have a good relationship with local entrepreneurs and investors. Tokyo is also an area with a very high talent cost advantage, but the same is said regarding Hong Kong.
Personally speaking, when choosing a location, I always consider the frequency of business with Japan. It is important to consider the time difference between that location and Tokyo and whether or not you want to come back every month. The next point is the ease of understanding accounting and legal affairs as a foreigner. In addition, ease of doing business in English and Chinese-speaking countries, along with geopolitical stability are also important. Considering the tax system, operation costs, the culture, ease of living as a Japanese person, and whether it is a global city is also important. And, personally speaking, the climate and landscape are very important considerations if you are going to stay somewhere for the long-term.
Based on these points, let’s look at some of the cities I am familiar with. As for Hong Kong, since the time difference is only one hour and it only takes four hours to get there by plane, traveling back and forth is no trouble at all. What’s more, as a foreigner, accounting and legal work in Hong Kong is much easier than in other places such as America. Naturally, we can access both English and Chinese-speaking countries. As a Japanese person, I was able to live quite comfortably. The reason being is that people in Hong Kong are very open and friendly toward foreigners. Never once have I felt a sense of remoteness because of language or culture. So, living there long-term causes no stress. In terms of climate and landscape, there are many mountains in Hong Kong, so there is a sense of familiarity. Entrepreneurs often compare Hong Kong and Singapore. Whenever I go to Hong Kong, I am always asked why I chose Hong Kong and not Singapore. Personally speaking, I get the feeling that people who are a bit different or have untypical goals come to Hong Kong. Hong Kong is a perfect fit for those who want to stay for the long-term and pursue their own business dreams.
As for Boston, because it is located so far from Japan, it is not a very familiar place. It is now undergoing rapid redevelopment. It has become a hub not only for life sciences but IoT as well. This is because GE moved their IoT research center to Boston, and the engineers there are working towards building a single, large ecosystem. Considering that the economic center of activity will shift to Asia in the coming years, Boston is not an appropriate place to act as a business hub due to its poor access to the Chinese market. Though, it is a great place to act as a hub for academic research centers.
Finally, regarding the utilization of Hong Kong for startups, it has the past experience and the appropriate systems already in place. Because of its size and available resources, there is a large variety of startups. Through the use of Hong Kong’s global reach and global connectedness, how to make it a global connected hub in the Hong Kong area will be an important issue. In this way, I feel that we can step-up globalization.