Incubators play a crucial role in boosting Hong Kong entrepreneurship in the GBA
This article appeared originally in the China Daily on 19 September, 2022.
Authors: Judy Chen, Senior Researcher, and Pascal Siu, Researcher at Our Hong Kong Foundation.
According to a recent survey conducted by HSBC, about 40 percent of Hong Kong residents expect to work, study, or retire in the mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area within 12 months of the resumption of normal traveler clearance between Hong Kong and the mainland; if the period is extended to one year or more, the percentage increases to 72 percent.
In fact, there are many young people who are already working and starting their businesses in the Greater Bay Area. After the State Council released the “Plan for Comprehensively Deepening the Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone” in September 2021, the Legislative Council passed a motion calling for the Hong Kong Special Administrative Region to proactively participate in this undertaking. In this regard, the HKSAR government announced in July that about 1,100 Hong Kong graduates are working under the Greater Bay Area Youth Employment Scheme, which was launched last year, and 63 percent of them are working in Shenzhen. In addition, the Funding Scheme for Youth Entrepreneurship in the Greater Bay Area has funded 16 Hong Kong NGOs to organize youth entrepreneurial programs and successfully recruited 217 startups.
While the opportunities in the Greater Bay Area are boundless, there are two significant challenges faced by Hong Kong companies that intend to start businesses on the mainland; namely, the process of setting up companies and raising capital.
Under current regulations, Hong Kong enterprises must apply for a business license before operating on the mainland, and go through steps such as tax registration, foreign exchange registration, and bank account registration. The process is complicated and undoubtedly a major challenge for startups that are short of manpower and resources. For example, to apply for a business license in Shenzhen, the applicant has to apply for name registration and obtain preapproval from the Shenzhen Industrial and Commercial Bureau to make sure that the company name meets relevant requirements, and then submit an application to the Shenzhen Trade and Industry Bureau for approval to register a business license. Coupled with filing for foreign trade operations and other registrations, the whole process of obtaining a business license usually takes four to six months.
Raising capital is another challenge for the startups. Entrepreneurs often do not have the experience and connections to raise sufficient funds in the private sector; even if they do, the cost of financing can be quite high. Since it is difficult for startups to keep abreast of the latest policy trends, applying for government funding is also challenging.
Business incubators may be able to help tackle these two issues. Incubators usually nurture and support startups mainly by providing them with operational facilities and logistics services so that the startups can focus on their business. There were 1,036 incubators in Guangdong province, according to statistics from the Torch Center of the Ministry of Science and Technology in 2019. Numerous and widely available incubators can provide one-on-one assistance to startups in various areas such as registering business licenses, opening bank accounts, applying for government subsidies for premises or other fundings, and organizing entrepreneurial networking activities.
Some incubators even offer advanced services, such as recommending outstanding startup teams to participate in innovation competitions, seeking business collaboration opportunities for startups, and setting up marketing teams to help startups connect with industries, which can significantly help startups establish footholds and expand business in the local market.
Entrepreneurs from Hong Kong who wish to start their own businesses can take advantage of the government’s support, such as the Funding Scheme for Youth Entrepreneurship in the Greater Bay Area. In summary, incubators are essential for startups, especially for young people who are starting their businesses in a new place. The Greater Bay Area is becoming a fertile ground full of more opportunities than challenges for Hong Kong entrepreneurs who can realize their dreams if they seize the opportunities.