Is Hong Kong the New Tech Hub of China?

    By now, it’s more-or-less inevitable that China will become Asia’s next major tech hub. With a bigger workforce than anywhere else on Earth, the country is currently being fought over by many of tech’s giants, hoping to secure a slice of this emerging mega-market. But where is this coming tech explosion going to take place? Received wisdom would tell us that one of the mega-cities like Beijing or Shanghai or Shenzhen is the likely favourite – combining gigantic populations with an already-established digital business scene. However, we’re not convinced. During the course of our research, we’ve come across plenty of evidence that Shanghai and Beijing are slowly falling out of favour, in preference for a southern rival.

    Yes, Hong Kong is currently shaping up for what might be the biggest start-up growth in Asia for years. From faster internet access than its mainland rivals to a firmly pro-business attitude and a relaxation of censorship, the signs point toward canny developers making their base in China’s most-Westernised city. For a full run down of our data, check out our infographic below. But first, a quick overview of the main points:

    Tech Freedom

    It’s no secret that China is one of the most-controlled societies on Earth. A vast government firewall severely restricts what residents can view online at any given time, while an endemic surveillance culture ensures everyone is always being watching. However, this does not and never has applied to Hong Kong. As we note below, Hong Kong has utterly unrestricted internet access, along with a far higher percentage of citizens who routinely go online (90% compared to just 72% in Beijing).

    Obviously, numbers like this are going to be very tempting to foreign companies wishing to locate their Chinese base there; but it’s not just where internet is concerned that Hong Kong is ahead of its mainland rivals. Whereas the mainland boasts only three, government-operated mobile service providers, Hong Kong has five independently-owned services. The benefits of this freedom from government intrusion are summed up in statistics on phone ownership. On the mainland, the percentage of mobile phones per person is 81.2%. In Hong Kong, it’s 230%.

    Business Advantages

    Of course, it’s not purely within the tech industry where Hong Kong’s advantages become apparent. One of the most-striking aspects of our research was into business in Hong Kong versus the rest of China. On the mainland, we discovered, it can take up to 60 days to register a new business and open a bank account. In Hong Kong it takes only two. The positive effect this has had on investment is easy to see: whereas Beijing and Shanghai both saw net decreases in the percentage of Chinese tech startup hosts in 2012, Hong Kong saw a significant increase – suggesting the tide may be turning. Even more amazing, the region went from boasting a mere 6 members for startupshk.com in 2009, to over 5,000 by 2012. Such a rate of growth is nothing short of phenomenal; a fact compounded by our discovery that Hong Kong had more than double the number of new businesses launched compared to New York City in 2011.

    Barriers

    However, there are still obstacles Hong Kong needs to overcome if it wants to become a leading tech hub. Most prominent among these are rent prices: average property prices in Hong Kong are 30% higher than in New York City – undoubtedly a worry for anyone looking to open a new business. Then there’s the problem of scalability: Hong Kong’s small population (around 7million) makes it hard for new start-ups to scale up.

    But for all we’ve tried to highlight the problems facing the city, the truth is that Hong Kong “is poised to become one of the world’s technological leaders.” If our infographic research suggests anything, it’s that we can expect to see Hong Kong dominating Asia’s tech markets in the very near future.

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