Watch Out, China: Google 'Ignites' Hong Kong, Taiwan Start-Ups

Oct 18, 2015 Gordon G. Chang

“When I tell people that I moved from California to Hong Kong, I generally receive a puzzled look and the question, ‘Why?’ ” writes Maggie Lau in the South China Morning Post on Tuesday. “People always told me to do what I’m passionate about, and now I get to do that every day by building Sam the Local in Hong Kong.”

Lau and her business partner, San Franciscan Anita Chan, traveled across the Pacific to launch a site touting their favorite city.

A year from now, people will no longer question Chan and Lau about their relocation to Hong Kong. Soon, they will ask Californians, “When are you leaving for Asia’s best town for entrepreneurs?”

For decades, Hongkongers worried that their rote-education system was stifling entrepreneurship. Moreover, outsized profits from real estate speculation attracted those who thrived on risk. In fact, when kids thought about starting their own businesses in Hong Kong, they had dreams of emulating property magnate Li Ka-shing, not Steve Jobs.

Now, however, the city has become a magnet for the ambitious and daring. “From almost any Starbucks shop across the city to a fast-growing number of high-level industry events, perhaps the three topics most often discussed are start-ups, innovation, and entrepreneurship,” writes the Post’s George Chen. “In other words, as young Hongkongers keep complaining about low-pay entry-level jobs, many are striving to become their own bosses.”

And that’s not all. Along with the Center for Entrepreneurship of the Chinese University of Hong Kong, Google is behind the EYE Program, which is promoting the ten best start-ups in the city. Chan’s and Lau’s Sam the Local has been selected as one of them.

If you want to see what all the fuss is about, click here to enter Sam the Local, still in beta. And if you want to find yourself immersed in the most exciting place on earth, head to start-up Asia. Hong Kong, next-door Shenzhen, and nearby Taiwan are spinning off new businesses, and the odds say some of them will one day change our lives.

When it comes to start-ups, everyone is trying to catch up to Shenzhen, the home to giants Tencent Holdings, DJI Technology, and ZTE Corp. Don’t be surprised. Because of its anything-goes mentality, everything happens there. In Shenzhen, for instance, buildings abandoned by failing low-cost manufacturers don’t rust away as they do in other cities of China; they become filled by dozens of new businesses, started by the ambitious with a few yuan in their pocket and at least one big idea in their head.

Call it Shenzhen envy. Taiwan, an hour’s plane ride away, just formed Taiwan Startup Stadium. TSS, as it is called, is a “start-up accelerator,” designed to attract new businesses from elsewhere—Shenzhen looks to be the No. 1 target—and to help Taiwan people form their own. And TSS has Mountain View, California DNA: former Googler Anita Huang is the driving force behind it.

At the same time, Google is behind the effort to get start-ups to start up in Taiwan. Lee-feng Chien, the search engine’s managing director of Taiwan operations, has launched a campaign to get new businesses to locate in his country. His pitch is that entrepreneurs should adopt a “multi-city strategy” so they won’t get trapped in one small market and therefore prevented from scaling up fast.

The start-up that scaled up the fastest is Shenzhen’s Huawei Technologies. There are, however, reasons to think that this business, founded by former military officer Ren Zhengfei, is not what it advertises itself to be. It is unlikely that Huawei became the world’s largest telecommunications equipment manufacturer without being a front for either the People’s Liberation Army or the Chinese central government.

In Taiwan, the meddling is even less intrusive than in Shenzhen. True, TSS was funded by the National Development Council of the Executive Yuan, one of the branches of the Taiwan government, yet the difference between China and Taiwan is that in the former, officials almost never let go of their business creations.

And things could get worse for China’s entrepreneurs. Chinese Premier Li Keqiang has his plan for start-ups, dubbed the “Internet Plus” strategy. Internet Plus, along with the “Made in China 2025” plan, have now become submerged in his call for a “new industrial revolution.” Add in the 13th Five-Year Plan, which begins next year, and President Xi Jinping’s new emphasis on state control of the economy, and you can see why Chinese bureaucrats will get even more opportunities to smother innovation.

In freewheeling Shenzhen, start-ups have been doing just fine without Internet Plus. And in fact, the start-up craze may have gotten too crazy. Says Google’s Chien in Taiwan, “Mainland China has been too hot for a long time in terms of investments in start-ups.”

As a result, the action is moving south, to Hong Kong. There, people had complained for decades about the lack of support for innovation. Those cries are not heard as much these days, however. And that proves the wisdom of one very old principle. The laissez-faire policy—sounds like a contraction, no?—of the British when they ruled the territory has carried over under Beijing’s so-called “one country, two systems” system.

In Hong Kong, one of two Special Administrative Regions of the People’s Republic of China, the government has a very, very light hand in start-ups. There, officials provide the educational infrastructure and let kids take it from there.

And that policy, despite all odds, is beginning to succeed. So don’t be taken aback when a Sam the Local shows up in a city—or even a town—near you.

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