South Africa’s digital technology startups are being encouraged to grow in Hong Kong where a range of incubation, funding, and growth support programmes are in place to help innovators succeed, says Stephen Phillips, director-general of Investment Promotion at InvestHK, the department of the Hong Kong Special Administrative Region (HKSAR) Government responsible for Foreign Direct Investment.
Speaking during a visit to Johannesburg last week, Phillips said Hong Kong was stepping up its drive to attract South African and pan-African tech startups and digital businesses to the SAR.
Startup businesses are reported to be thriving in Hong Kong, with nearly 4 000 new businesses from around the globe now based there – 52% up on 2018. These startups operate in various sectors, however, most operate in the digital technology sector. And many of these take advantage of Hong Kong’s specialised incubators and business accelerators, as well as comprehensive government funding schemes.
Phillips says that through Startmeup.hk, InvestHK helps innovative and scalable startups to set up or expand in Hong Kong.
Hong Kong is Asia’s leading business destination and recognised as the gateway to Mainland China and Asia. The Special Administrative Region is now stepping up its efforts to attract African and South African business with the opening of InvestHK representative offices in South Africa and Kenya. Hong Kong, located within five hours’ travel of two-thirds of the world’s population, is the ideal entry point to the region, Phillips says.
Phillips adds there is growing interest among African businesses in the potential for expansion into the Asian market. “For years, there has been Chinese investment into Africa and cordial relations between China and some African countries, and we are now seeing the start of flowback investment into China out of Africa,” he says.
With a local population of 7,5-million and 86-million from the Greater Bay Area, Hong Kong is a significant art, food and consumer goods market, with significant opportunities for Smart City and IoT technology, electronics and green technologies. Its ageing population and growing wealth also drives demand for healthcare and life sciences solutions.
“Hong Kong offers a route to growth markets in Asia with their demographic dividends, high rate of tech adoption, and growing intra-Asian investment flows,” Phillips says. “Of course, there is also the economic beast – mainland China – with opportunities to enter the market through JVs and partnerships.”
Hong Kong is an international finance centre with an independent legal system, rule of law, free flow of information and capital, and a competitive tax system. Profits tax for the first HK$2-million of profits of corporations is 8,25%, while tax on profits over that amount is capped at 16,5%. Hong Kong has zero sales tax and no import tariffs on almost all products.
Hong Kong has Free Trade agreements with Mainland China, New Zealand, the Member States of the European Free Trade Association (EFTA), Chile, Macao, the Association of Southeast Asia Nations (ASEAN), Georgia, and Australia, with further agreements under discussion. Hong Kong has also signed Investment Promotion and Protection Agreements with 20 economies.