Hong Kong businesses hope for easier access into lucrative Greater Bay Area

HONG KONG: Businesses in Hong Kong are hoping that city leader John Lee's policy address on Wednesday (Oct 19) will ease access to the lucrative Greater Bay Area (GBA).

Technology startup Roborn uses competitions as strategic launchpads to access the Guangdong-Hong Kong-Macao region, known as the Greater Bay Area (GBA), one of China's most economically prosperous areas.

Having a presence at those competitions has helped the company gain a foothold in the larger Chinese market, as well as insights into the strengths, policies, and opportunities in different cities, Roborn’s co-founder Mark Mak said.

However, navigating unfamiliar territories can be difficult, with different operational requirements across the GBA. Businesses like Roborn are hoping that Mr Lee’s policy address will clear some hurdles and help them ease their venture into the lucrative area.

One of the biggest challenges across the Hong Kong-Guangdong border is logistics, said Mr Mak. Import rules and prices have made it difficult to replace faulty parts and ship controlled goods such as batteries, he added.

“Every city has different policies and different subsidies,” said Mr Mak. “If there could be support from the government in logistics to and fro for tech companies like us, that would be perfect.”

He added that differences in accounting and testing systems are also among the tough challenges faced by start-ups like Roborn, a young innovation and technology company specialising in robotics and analytics.

“Some of our products are made with the international standard instead of the Chinese standard. So, we need to have easier conversions in order to build our products in China with the Chinese standard,” he said.

APPEAL OF THE GBA

Despite difficulties, businesses said there are untapped prospects in the GBA, with a large pool of talent, readily available resources, and lower costs.

“Hurdles are positive ... as there are lots of opportunities in the GBA,” said Mr Mak.

“In Hong Kong, manpower and rental are relatively high ... so it is difficult for us to source for reliable and suitable suppliers. But in the GBA there are lots of factories and software houses and design teams – that makes it easier for us to complete our designs,” he said.

Roborn is one of 100 Hong Kong enterprises registered in the GBA so far. It said ease of access is an important factor in its expansion plans. The company established its first mainland offices in Qianhai as a stepping stone as it was able to use the Hong Kong currency there, and was offered the same testing policies.

Since then, the start-up has set up offices in at least five Chinese cities including Dongguan, Shanghai, and Jiangmen.

The GBA, a massive development project by Chinese President Xi Jinping, comprises Hong Kong, Macao, and nine municipalities in Guangdong Province. It spans an area of around 56,000 sq km.

Chinese media last year reported a gross domestic product of 12.6 trillion yuan (US$1.75 trillion) for the GBA - a figure many businesses in Hong Kong are hoping to get a share of.

SIMILAR CULTURAL, BUSINESS VALUES

Its proximity, growth potential, quality investors, and sheer market size – about 85 million people – are attractive to Hong Kong businesses that are keen on venturing into the GBA, said Mr Peter Mok, head of the Greater Bay Area at the Hong Kong Science & Technology Parks Corporation (HKSTP).

“The language and cultural barriers are also less, compared to other cities further up north in China. The GBA is the ideal expansion for the home market, for tech startups in Hong Kong,” said Mr Mok, whose agency helps businesses find their footing in their expansions.

“The investors in GBA come with very great values. Their risk appetite is higher and they come with a strategic value – usually when they invest, they know the industry. So it’s not just money, it’s also business relationships that the investors are able to bring in,” he added.

The HKSTP is setting up a branch in Shenzhen by the end of the year to strengthen integration links, and has immediate plans to help 150 Hong Kong companies expand.

"What we're trying to do is to provide all sorts of services to the startups to minimise the risk or to improve the efficiency when leveraging their business into the GBA areas,” said Mr Mok.

“We're working with various stakeholders in terms of facilitation of the people's mobility, flow of capital, data or information as far as products across the border. Help them to soft land more smoothly into the market first. Before we introduce them to different customers, markets, investors.”

However, expansions mean ramping up manpower that Hong Kong is lacking, and businesses are looking to the GBA to fill the vacancies.

HONG KONG TALENT SHORTAGE

Hong Kong’s technology boom in the past few years created a surge in demand for know-how that local universities and the existing talent pool could not fill, Mr Mok said, adding that there are more than 4,000 technology startups today, almost double that of five years ago.

“We’re trying to develop our technical team in Hong Kong and the biggest hurdle is human resources ... talent is one of the most important things that Hong Kong needs for innovation and technology,” said Mr Mak.

Hong Kong boasts five universities among the top 100 institutions worldwide ranked by British magazine Times Higher Education, along with government-funded research institutes and laboratories.

Despite this, businesses say that Hong Kong lacks those specialising in application, who can bridge the gap from ideation to production.

“There are lots of talents and professors in the research area but how can we convert those talents to application?” asked Mr Mak. “I believe we have to attract more talents from all over the world, especially from China, in order to make it easier for conversion from our academic research.”

HKSTP said that it has engaged local universities and research institutes to promote tech education. Young start-ups are also able tap into living subsidies to get situated. But industry players said it takes more to attract and retain talent.

“Attracting talents – most important is career and business opportunities that we are able to create, supported by capital injections and private sector investments,” said Mr Mok.

"We cannot just use the public money to keep on funding private enterprise. The system doesn't work like that. Business is business,” he added.

ALL EYES ON JOHN LEE’S POLICIES

As China builds emphasis on innovation in the region, there is demand for more consistent regulations across the board.

"We hope the government can come up with measures to allow Hong Kong and GBA to have a better link, including information flow and talent flow and all kinds of data flow will be easier for all the cities to link together,” said Elizabeth Quat, chairperson of the LegCo Subcommittee on Matters Relating to the Development of Smart City.

In his first policy speech since taking the reins in July, Mr Lee is expected to lay out what he calls "bold measures" to attract talents, businesses, and investments to Hong Kong, as well as stronger operational and manpower support needed to access the GBA.

Businesses said they hope Mr Lee unveils initiatives that will encourage startups and business expansions between Hong Kong and the GBA, as well as attract companies and talents into China through the area.

"We have expectations for the (policy address) ... we have to have more initiatives to attract people to Hong Kong," said Mr Mok.

He added that the role of Hong Kong to attract global talents into the GBA will be “very significant” in the coming years.

“When we have a stronger platform and innovation and technology in GBA, we can also attract different companies from different parts of the world to come to Hong Kong, or through Hong Kong into the China market," he said.