May 15th 2013: In a candid interview with HKTDC, Localiiz founder and director Richard Codron
and co-work centre Fill In The Blank
talk about the rise of Hong Kong SMEs and what must be done to secure prosperity in the future.
Entrepreneurs often cite Hong Kong’s low barriers to entry, including lack of red tape, the rule of law and the ease of the financial system as reasons for setting up a business in the city.
Count Richard Codron among them. “If you go right back to the post-war era, a lot of the people who set up Hong Kong were small-business owners; they were independents and that’s really where the small-business culture stemmed from,” said Mr Codron, who arrived in Hong Kong from London two decades ago. “It’s always been an entrepreneurial city, and Hong Kong is full of owner-run businesses.”
Spotting a gap in the market for companies that wanted to promote themselves and consumers who were looking for an English-language business directory, Mr Cordon set up Localiiz
, an English-language online directory, last year.
Localiiz is among the hundreds of new businesses being set up, many by overseas entrepreneurs. “It’s not just Europe, but from all over the world,” Mr Codron noted. “America, Australia, China. Definitely the financial crisis has played a part, but it is also a great place to do business.”
Heart of Asia
Andrew Davis, Associate Director-General of the Hong Kong Government’s InvestHK, said that Hong Kong’s business advantages stem from a combination of factors. “I do think we have the edge,” Mr Davis said. “We’re seeing more small and large companies coming in. But, yes, Hong Kong is definitely attracting a lot more SMEs.
“The great thing about Hong Kong is that the barriers to entry are very low. It’s one dollar, one director, one hour, as we say,” Mr Davis continued. “There is a lot to attract people to Hong Kong – the heart of Asia, the gateway to China and, with seven million people, it’s a mixed market. And if you’re starting a business, Hong Kong is a good test market before going into a bigger market.”
Remaining on Top
But to remain at the top of its game, Hong Kong must continually look to innovate. "When I look at creativity and innovation in Hong Kong, we have been going steadily backwards and become very corporate,” Mr Codron said. “But the F&B sector has been the one sector that has really driven innovation. That entertainment space is driven by aspiring entrepreneurs, and that has had a huge knock-on effect on other segments."
Hong Kong’s status as a favoured destination for overseas entrepreneurs has led to shortages in commercial and educational space. "Even though the barriers to entry are very low, this is one of the most expensive cities in the world, so the cost factor is definitely relevant, especially if you have a family," Mr Codron said.
Mr Davis has seen many of his clients voice similar concerns, but he noted: “We’ve seen the private sector look at some of these challenges, and there are, for example, now lots of co-location spaces, and that’s encouraging.”
In August 2012, Prerna Agarwal and her brother Saurabh Agarwal founded Fill in the Blank
after seeing a need for medium-sized venues that could be used in different ways.
“We are a creative and social space. We try to bring a unique experience to our guests by accommodating both the working and the playing,” said Ms Agarwal. “For the work crowd, there's complimentary WiFi, printers, dry-erase table tops and, for study breaks, there's a foosball table, movie projector and an extensive selection of board games. However, we are also a multi-functional event space, here to fill any of the blanks in a venue that you seek but Hong Kong can't provide.”
Ms Agarwal’s time away from Hong Kong attending university in New York inspired her to open Fill in the Blank in her home city which, at the time, did not have many shared work spaces. “Making our size the selling point was our solution to Hong Kong’s notorious space issue, Ms Agarwal said. “And so far we’ve hosted comedy nights, coffee tastings, shopping bazaars and, right now, I’m lining up our first-ever fashion show.”
Knowing Your Customer
Knowing your market is an essential part of any start-up, and Mr Codron advises would-be entrepreneurs to look at Hong Kong as part of a wider market.
“A lot of people look at just the expatriate market on its own,” Mr Codron said. “The expat market represents a tiny fraction of the entire Hong Kong market. The majority of people who are finding us, who are going onto our platform, are English-speaking Chinese. A very interesting stat, and I think that’s the future – a huge demographic.”