Hong Kong and Shenzhen Form an Unbeatable Duo in Entrepreneurship

In terms of entrepreneurship, Hong Kong need not be Shenzhen, according to Prof. Kevin Au who shared with Nikkei Asian Review in a press conference. He further explained that the relationship between Hong Kong and Shenzhen resembled that of Silicon Valley and New York in the United States, with the former specializing in research and development of cutting-edge technology, and the latter focusing on growing new markets and product innovation.

Kevin Au, Associate Professor of Department of Management and Associate Director of Centre for Entrepreneurship (CfE) at The Chinese University of Hong Kong (CUHK) Business School, was speaking at conference about his recent study titled “Global Entrepreneurship Monitor (GEM) Hong Kong and Shenzhen Report 2016-17“. The joint study was released on 15 February 2017 by CUHK Business School’s CfE, Hong Kong Baptist University’s School of Business, The University of Hong Kong’s Faculty of Business and Economics, Shenzhen Academy of Social Science and Savantas Policy Research Institute.

The southern city of Shenzhen is often dubbed as China’s Silicon Valley. While it is home to well-known technology brands, from Tencent Holdings to smartphone producer ZTE and drone maker DJI, across the border its rival city Hong Kong is playing catch-up.

Shenzhen has topped Hong Kong in terms of entrepreneurship in Greater China, according to the joint research. Sixteen out of every 100 adults in Shenzhen were engaged in early-stage entrepreneurial activities in mid-2016, more than a threefold increase from 2009 when the figure was less than five. This compared with about 9.4 percent of Hong Kong’s adult population that was involved in entrepreneurial activities last year, up from 3.6 percent in 2009.

“But a high entrepreneurship rate may not necessarily be a good thing. It could mean that there are no better opportunities in a developing economy,” said Prof. Au who led the research.

A rush to entrepreneurship might be linked to relatively lax lending for new businesses in Shenzhen. The Shenzhen Government has subsidized banks to provide loans for startups. The heavy financial support has aroused concerns that the visible hand of state capitalism is fueling credit growth and bringing with it inefficient lending and soaring bad debts at local banks.

“Hong Kong need not be Shenzhen. This is simply an absurd idea,” said Prof. Au. He likened the different roles of the two cities to that of Silicon Valley and New York in the United States. The former has specialised in research and development of cutting-edge technology. The latter has focused on growing new markets and product innovation.

Despite a recent proposal to build an innovation park in the border area between the cities, technological collaboration between Hong Kong and Shenzhen has been largely minimal. Prof. Au cited growing public skepticism about Hong Kong-China integration and differences in government systems as hurdles.

“Initiatives in China are typically top-down and focusing on long-term development. This is unlike Hong Kong where innovative ideas are from below and immediate returns are important,” he said. “It will be an unbeatable combination if Hong Kong and Shenzhen can join forces and complement one another, but the question is how far they can cooperate.”… Read More (PDF)

Source: Nikkei Asian Review
Date published: 16 February, 2017