The Findings of the Global Entrepreneurship Monitor (GEM) Hong Kong and Shenzhen Report on Hong Kong Start-up Businesses
The Chinese University of Hong Kong (CUHK) Business School’s Center for Entrepreneurship (CfE) and Hong Kong Baptist University (HKBU)’s School of Business, published the “Global Entrepreneurship Monitor (GEM) Hong Kong and Shenzhen Report 2016–17” in early February. The GEM Hong Kong and Shenzhen Report 2016–17 shows that the start-up rates recorded a staggering increase in Hong Kong and Shenzhen from 2009 to 2016.
Global Entrepreneurship Monitor (GEM) is the world’s foremost comparative entrepreneurship study and a trusted resource on entrepreneurship for key international organizations such as the United Nations, World Economic Forum, World Bank and more. The study compares the results with past indicators for both ecosystems and provides an international benchmark with 65 economies worldwide. It is also contributed by a group of representative Hong Kong and Shenzhen institutions, including the China University Entrepreneurship Research Center, Baptist University for Business Administration, the University of Hong Kong School of Economics and Business Administration, Shenzhen Academy of Social Sciences and Savantas Policy Research Institute, in which revealed a large decline in Hong Kong’s competitiveness, some of the difficulties of SMEs operations and the future vision for sustainable development.
Hong Kong has always lacked long-term technological development policies, and this coupled with Hong Kong’s special geographical advantage and unique regional role has meant that previously local enterprises have only needed to concern themselves about the dynamics of the local market. They have been slow to recognize and react to the changes in both domestic and international markets due to the development of the Internet and e-commerce. This has contributed to the lack of competitiveness and the trend is going from bad to worse.
GEM reported several points worthy of focus regarding Hong Kong start-ups:
1. Other cities in China entrepreneurial rates have begun to decline, while Hong Kong and Shenzhen’s entrepreneurial rate is on the rise, this phenomenon reflects the fact that Shenzhen and Hong Kong have developed a unique entrepreneurial culture and ecosystem, different from other parts of the Mainland.
2. The research team also observed a major shift in attitudes and entrepreneurial intentions. In particular, 56.8 percent of the adult population perceives start-up opportunities in Hong Kong. Comparing to 2009, the population with entrepreneurial intentions in Hong Kong grew from 7.3 percent to 19.7 percent in 2016, representing an impressive increase of +170 percent. This means that some of the previously successful businesses will face challenges from new competitors.
3. In terms of financial support, the role of the family in financing new ventures is still significant in Shenzhen, but not so much in Hong Kong. Banks are also more supportive of startups in Shenzhen than in Hong Kong and so are venture capitalists, which could be explained by a higher prevalence of start-ups with profound market impact. Moreover, although crowdfunding is more prevalent as the source of capital for early-stage businesses in Shenzhen, it is yet to be adopted in Hong Kong due to some outdated laws and conservative regulatory concerns.
4. The research team interviewed 39 Hong Kong and 37 Shenzhen experts in the field of entrepreneurship about their opinions on how the cooperation between Hong Kong and Shenzhen that would increase the cities’ international competitiveness. The most frequent recommendation was to leverage the natural industry compatibilities between Hong Kong and Shenzhen. Other recommendations include:
• Joint development of industries such as Internet-of-Things, Smart City, Health Tech, Edu Tech, Fintech or E-commerce
• Joint R&D initiatives aiming at cross-border innovation, sharing of talents and intensification of knowledge exchange
• Introduction of joint or cross-border education to develop a shared cultural understanding of each other through opening more world-class academic institutions catering to students from both sides of the border
• Coordinating government policies for entrepreneurship between the two economies, e.g. joint visas for entrepreneurs that would facilitate cross-border operations of many start-ups
Finally, the report pointed out that if Shenzhen and Hong Kong can co-operate closely, the area is not only a very suitable place for the development of start-up companies, but is potentially the world’s strongest! Unfortunately, I believe that at present, Hong Kong and the Mainland have two different ideologies, which are tearing these two strategic places apart! When and how will all these hurdles be cleared? I hope the Lok Ma Chau Loop development plan, which had been put on hold for over ten years, can be implemented as soon as possible, in order to stimulate the Shenzhen-Hong Kong partnership and to open a passage through the barriers that separate Shenzhen and Hong Kong. This will be a big step forward for Hong Kong’s to reclaim her long losing title of the world’s most competitive city again!
