With a massive population of 1.35 billion, a territory spanning nearly 10 million square kilometers, and the second highest GDP in the world, China’s position as a global superpower is by now well established. As one of the globe’s largest exporters of consumer electronics and digital technologies, the tech industry is an important part of China’s financial identity. Yet, despite its long-standing reputation as a technological leader, China’s dominance in the digital landscape is increasingly unstable. Heavy-handed politics and widespread web censorship are driving investors out of the Chinese mainland and discouraging the latest generation of young entrepreneurs.
Meanwhile, however, China’s "one country, two systems" policy has allowed Hong Kong’s tech industry to thrive. As a Special Administrative Region, the island benefits from low taxation, minimal government intervention, and free trade; while also enjoying unprecedented access to the mainland’s lucrative trade routes and vast consumer markets. Though having just 7 million permanent residents, Hong Kong registered 150,000 new businesses in 2011, and it now has one of the fastest growing startup communities in the world. The region’s uncensored Internet, remarkably cheap mobile plans, and recent proliferation of shared workspaces and startup incubators are all fueling explosive growth in the high tech industry. And because Hong Kong has exponentially faster and better-integrated Internet connections than elsewhere in China, web-based businesses operating there have a distinct advantage over competitors working from the Chinese mainland.
As Europe, Great Britain, and North America struggle to recover from recent economic downturns; Hong Kong’s unique political climate and close financial ties with cities like Shanghai, Shenzhen, and Beijing make it one of the most attractive investment centers in the world today. Already measuring up to the powerhouse tech communities in New York City, Southern California, and London; the so-called Silicon Harbour seems poised to become massively influential in the global tech landscape.
Hong Kong’s relatively nascent high tech industry nonetheless faces many significant challenges. Land scarcity continues to balloon already astronomical property prices, startups have a tough time scaling up in an administrative region of just 7 million, and many local investors still lack confidence in the emerging tech industry (particularly because Hong Kong’s economy has been dominated almost exclusively by finance and real estate for decades). And although the economic tide is beginning to somewhat shift, Hong Kong’s investment community does little to support innovation. In 2012, R&D expenditures accounted for just .73% of GDP.
So, while many experts and business speculators are enthusiastic in their projections that Hong Kong will soon become the continent’s technological leader, the city’s future remains uncertain. In any case, Hong Kong undeniably has all the hallmarks of being on the brink of a high tech boom. The infographic below, compiled by HotelClub Hong Kong, will help you see for yourself what the island’s future might hold.
Do you think Hong Kong is the new tech hub of China? Share your opinion in the discussion thread.