China's Hong Kong remains one of the most competitive hubs in the world for startups, with the number of new venturs hitting a record high of 4,257 in 2023, up by nearly 300 compared to the previous year, thanks to its business-friendly environment.
Despite headwinds and challenges, many businesses are confident that the startup ecosystem will continue to support growth.
For friends-turned-business partners Brian Lo and Martin Li, Hong Kong's status as a free port with zero import tariffs wasn't the only reason the pair chose the city to launch Markato, their retail platform.
"We are from Hong Kong and it makes a lot more sense for us to base a startup in our home market in Hong Kong. So, I think those are the two big reasons. We didn't really think about why we should launch anywhere else," said Lo.
Launched last September, Markato is an online wholesale marketplace linking products and brands from markets including the U.S. and Europe to retailers in Asia. In just 10 months, it has grown its network of brands under the platform to 800. Lo says he and Li saw a clear opportunity to build a bridge for them to tap into the region.
"A lot of these actual brands talked about the friction points of being able to access the Asian market - languages, like multiple different languages, time zone gaps, a lot of the smaller brands don't have the resources or know-how to think about how to get their products into markets like Hong Kong, Singapore, Australia, Japan, (South) Korea," Lo said.
Startups in Hong Kong can take advantage of various government funding schemes, while an investment-friendly environment and robust legal system make it highly competitive for businesses to thrive. Li says it is an ecosystem that has spurred a wave of startups to launch in the special administrative region.
In its annual global competitiveness rankings, the Swiss-based Institute for Management Development (IMD) ranked Hong Kong top in the world in international trade and business legislation, second in tax policy, and third in international investment.
Nonetheless, the city is without its share of challenges. IMD noted that Hong Kong must navigate a complex external environment amid geopolitical tensions and evolving international trade patterns.
The city's reputation has also been impacted by warnings from some Western countries, including the U.S., about the risks of doing business there.
According to local analysts, such negative rhetoric largely stems from those with no real stake in the city or its development.
"Unfortunately, some people who have not been to Hong Kong or even though they have been to Hong Kong but do not have a deep knowledge, aren't affected," said Andrew Leung, an independent China strategist.
With its favorable conditions and critical connectivity to the Greater Bay Area and the Chinese mainland, many in the business community feel that Hong Kong is well poised to face such headwinds and overcome them.
Hong Kong's startup scene flourishes with record number of new ventures in 2023
