[HONG KONG] Hong Kong has accomplished a feat that had previously eluded it: it has become a launching pad for tech startups targetting the massive mainland market and beyond.
This is largely thanks to the rapid integration with the Greater Bay Area in southern China, the city’s still internationally competitive business environment, and relatively free information flows.
According to latest official data, the number of tech startups in Hong Kong hit a record high of 4,694 in 2024, of which over 600 are in financial technology. This is a roughly 10 per cent increase from the 4,257 startups in 2023.
Together, they employ 17,651 employees, up 7 per cent year on year, according to an annual survey published in February by government agency InvestHK.
Clear vision
Hong Kong’s rising clout in tech comes just as the startup scene across the border in Shenzhen – the mainland’s prime tech hub – is losing some of its sheen. On one key metric – the number of unicorns, or companies with a valuation of more than US$1 billion – Hong Kong has even surpassed Shenzhen.
According to CB Insights, an industry tracker, Hong Kong is currently home to nine unicorns – including Babel Finance and Trendy Group International (both with US$2 billion in market capitalisation) – compared with just six in Shenzhen.
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The Hong Kong government, which counts more than 10 unicorns due to different definitions, has said that it wants to boost its stable of unicorns to 30 in 2032. Just over a decade ago in 2014, it had zero.
Local entrepreneurs now represent 72 per cent of all startup founders, up from 68 per cent the previous year.
King Leung, InvestHK’s global head of financial services, fintech and sustainability, said that founders in general tend to have a clear vision of the problems they want to solve.
“They work hard to develop solutions, seek out potential clients or investors, and demonstrate resilience and passion for their projects. Local entrepreneurs, in particular, are willing to ‘hustle’ due to the can-do attitude they have grown up with in the city,” he wrote in an e-mail to The Business Times.
Among the tech unicorns in Hong Kong are fiintech players HashKey Group, ZA Bank, WeLab and Airwallex.
Leung highlighted Animoca Brands, WeLab, GoGoX, LaLaMove and SmartMore as notable graduates of incubation programmes sponsored by Cyberport and the Hong Kong Science and Technology Park.
Proximity and priority access to mainland market
He attributed Hong Kong’s expanding tech startup scene to several factors. These include the proximity and priority access to the Chinese mainland market, its international outlook, a robust common law system with strong intellectual property protection; and a complete free flow of capital.
“Hong Kong plays a vital role in bridging mainland China and the world, particularly within the booming tech and startup landscape of the Greater Bay Area,” he said.
The government’s push to lure talent from across the border has also boosted the growth of tech startups.
Among the 28 per cent of startup founders who hail from outside Hong Kong, 40.3 per cent of them come from mainland China, followed by 10.7 per cent from the UK and 9 per cent from the US, according to the InvestHK survey.
“A few years ago, I often heard startup entrepreneurs saying they could not afford to be in Hong Kong – not just because of the policies, but because it was too expensive,” said Professor Tim Cheng, vice-president for research and development at the Hong Kong University of Science and Technology (HKUST).
“The cost of running an office was probably the highest in the world and it was difficult to recruit experienced people, so they chose to go to Singapore. Now that is changing,” he added.
Prof Cheng has observed the blossoming of the indigenous tech scene over the past decade as aspiring tech entrepreneurs are drawn to the city, and the Hong Kong government and local investors warming to technology, a drastic switch from their prior obsession with all things finance.
For example, local corporations such as Lee Kum Kee Group, Nan Fung Group and Sun Hung Kai Properties have invested in a fund set up by HKUST to foster technology development in the city.
“We are international. Geopolitics gives a very unique window to Hong Kong, because we connect two isolated worlds, and they are trying to buy products from each other. Hong Kong plays an important role in that we connect to both,” said Prof Cheng.
He pointed out that a decade ago, those who wanted to do tech mostly went to Shenzhen, but the tide has shifted and now many are heading to Hong Kong instead.
“That’s why Hong Kong has to maintain its international position as the highest priority. Hong Kong’s international position gives us all the advantages. The advantage was shrinking; now it’s expanding again,” he said.
