In recent years, Hong Kong and Shenzhen have experienced an explosive growth in the start-up support ecosystem.
The start-up rates recorded a staggering increase in Hong Kong and Shenzhen from 2009 to 2016, according to a research report written by Prof. Kevin Au at the Chinese University of Hong Kong(CUHK) Business School‘s Center for Entrepreneurship(CfE) and his collaborator, Dr. Marta K. Dowejko, former post-doctoral fellow at the CfE and now Research Assistant Professor in Entrepreneurship of the Department of Management at Hong Kong Baptist University’s School of Business.
“The last time we measured the intensity of start-up activities in Hong Kong and Shenzhen was in 2009. Since then, both cities have experienced a tremendous growth in their entrepreneurship support ecosystems,” said Prof. Kevin Au, Associate Director of CfE and Associate Professor at the Department of Management of CUHK Business School, who led the study with his partners in other research institutes.
The study is part of the global initiative, Global Entrepreneurship Monitor (GEM), which is the world’s foremost comparative study of entrepreneurship and a trusted resource on entrepreneurship for key international organizations such as the United Nations, World Economic Forum, and World Bank.
With the aim to provide a detailed analysis of the current status of entrepreneurship in Hong Kong and Shenzhen, the team interviewed over 4,000 individual entrepreneurs and nearly 80 experts on entrepreneurship in Hong Kong and Shenzhen from April 2016 to November 2016.
Entrepreneurial Prevalence Rates
According to the study, in mid-2016, the early-stage entrepreneurial activity among the adult population (i.e., 18 to 64 years of age) was estimated at 9.44 percent (as compared to 3.64 percent in 2009) in Hong Kong and 16.04 percent (as compared to 4.8 percent in 2009) in Shenzhen.
The positive change was seen not only in early entrepreneurship rates but also in a major shift in attitudes and entrepreneurial intentions.
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 more than 170 percent. Similarly, in Shenzhen the intentions to start a business grew from 17.6 percent to 36 percent, an increase of more than 105 percent.
According to the researchers, cultural conditioning and attitudes towards entrepreneurship, perception of own skills, and exposure to entrepreneurship practices all had a positive impact on intentions to start businesses. In addition, successful entrepreneurs are also regaining their high status and are promoted by local media in both Shenzhen and Hong Kong.
“It is worth noting that while entrepreneurship rates are on the rise in Hong Kong and Shenzhen, they are declining in other places in China. The two cities have developed a regional start-up culture and entrepreneurial ecosystem that operate quite differently from the rest of mainland China,” Prof. Au pointed out.
Industry Sector and Market Impact
In terms of industry sectors, although with a decreasing share in the economy, consumer-oriented services (e.g. restaurants, retail stores, rentals, repairs, etc.) still represent the largest industrial sector of interest for early-stage and established firms from Hong Kong and Shenzhen. Business-oriented businesses are on the rise, though with a lower share when compared to other innovation-driven economies. Overall, both cities are undergoing a positive industrial makeover, aligned with the structural composition of other innovation-driven industries.
In Shenzhen, early-stage entrepreneurs recorded the highest proportion of ventures active in technology sectors than in any other economy in the study.
As much as 17.2 percent reported their businesses being high to moderately advanced in technology terms, and seven times higher than in 2009.
Similar pattern was recorded for established ventures in Shenzhen – the city became the leader of efficiency-driven economies in the share of activity in technology sectors with 15 percent of established business owners reporting such capacity.
This was sufficient to increase the overall profound market impact of Shenzhen-based ventures, whereas in Hong Kong, the share of early-stage entrepreneurs active in technology sectors almost quadrupled in Hong Kong as comparing to 2009, but entrepreneurs reduced their overall assessment of their market impact.
According to the study, firms with profound market impact are still rare in Hong Kong and their proportion has slightly decreased since 2009. More low-impact businesses were founded, providing some product or market innovation combined with innovative technologies.
In general, a business is considered having high impact when it delivers a profound market expansion; its products or services are novel to customers; or when it has little or no competitors.
However, in Shenzhen, the share of high-impact businesses is on the rise with firm owners reporting the use of newer technologies more than those of Hong Kong firms. On the other hand, Hong Kong early-stage firm owners declare providing better product or market innovation combinations than their Shenzhen counterparts.
“Hong Kong is oriented toward new products and new market combination, whereas Shenzhen has the highest proportions of start-up activities in the high technology sectors,” added Dr. Dowejko.
Hong Kong economy has always been internationally oriented and it is no surprise that the city ranked highest in the cross-country comparison in terms of its percentage of businesses with more than 50 percent of revenue generated outside of the domestic market. Within the economy of 2016, 29 percent of Hong Kong’s early-stage businesses generated more than 50 percent of their revenue aboard, as compared to 10 percent in Shenzhen which focused more on their local market with the development of the Chinese economy.
“This is closely related to the size of domestic markets for both cities. Hong Kong will continue as the go-to city for international markets,” said Prof. Au.
Areas of Cooperation
“Shenzhen’s start-ups are well geared to deliver innovative ideas with high growth potential, and Hong Kong’s entrepreneurs possess the know-how in taking ideas to the next level and ensuring their long-term sustainability,” remarked Dr. Dowejko,
RCEP and China: Reimagining the future of trade in Asia
The Regional Comprehensive Economic Partnership (RCEP) could eventually usher in an era of much deeper regional integration: for corporates doing business in the region, their future success may well hinge on how adeptly they manage to navigate the evolution of Asia’s trade landscape under the RCEP.
Last month, 15 countries in the Asia-Pacific region – including the 10 member states of the Association of Southeast Asian Nations (ASEAN) as well as China, Australia, Japan, New Zealand, and South Korea – signed the landmark Regional Comprehensive Economic Partnership (RCEP) on the final day of the 37th ASEAN Summit.(more…)
Thailand ready to ink big Chinese-backed trade deal
The RCEP will cover all 10 Asean member states plus five partners: China, Australia, Japan, New Zealand, and South Korea and will take effect from the middle of 2021 if at least six Asean members and three partners agree to its terms.
Great Wall Motor (China) takes over GM factory in Thailand
The Thai production hub will become operational in the first quarter of 2021 with automobile production capacity of 80,000 units per annum.
Thailand approves COVID-19 AstraZeneca vaccine for emergency use
The first lot of 50,000 doses of COVID-19 vaccine developed by AstraZeneca will arrive in Thailand early next month, after...
Interprovincial travel in Thailand amid COVID-19 controls
The State Railway of Thailand (SRT) is suspending 57 additional train services from 26 January, 2021, as part of the...
Covid-19 puts flexible space markets under strain
In the wake of operator defaults, landlords will be forced to re-evaluate the role of flexible space in their portfolios.
Thailand to put world’s largest floating solar farm into use this June
The facility, which generates power on a water surface of 72 hectares, was originally scheduled for operation in December last...
TAT launches virtual tours to 4 top destinations in Thailand
Once inside an attraction, visitors can move around using the cursor, while some of the attractions have information about its...
Thailand’s automotive sector expected to produce 1.4m cars this year
This increase in output is a result of the recovery of domestic and export markets, with the annual output for...
Subscribe via Email
Forex1 week ago
Leverage from Forex Brokers & How Beginners Can Benefit from It
Economics6 days ago
Thai economy to grow 4% in 2021 following 6.5% decline in 2020
National6 days ago
Human trafficking cases in Thailand hit decade low due to COVID-19
Banking1 week ago
Can Fintech drive a strong post-COVID-19 recovery in Asia?