But why exactly did we decide to open up a space and launch here in Hong Kong? In this article, we share with you 5 reasons why we believe Hong Kong makes a great place as a Fintech hub.
1. Hong Kong is undoubtedly one of the most attractive financial centers globally
Hong Kong is consistently ranked as one of the most important financial centers in the world and the top financial center in China and Asia. Almost all major international banks with a presence in Asia would be located in Hong Kong. According to the Global Financial Centers Index (GFCI) published annually by the commercial think-tank Z/Yen, Hong Kong has remained its place as the third most attractive financial center globally behind only New York and London.
The financial services industry also remains a core sector for the local economy, employing 7 percent of Hong Kong’s workforce and contributing 18 percent of Hong Kong’s GDP. While neighbour Singapore represents a gateway to Southeast Asia and a wealth management hub, Hong Kong boasts easy access to the Mainland and still leads in IPOs. The Hong Kong Exchanges and Clearing Ltd (HKEx) statistics also show that 2017 had the highest number of new listings, the highest total market capitalization, and a much higher daily turnover than 2016 did.
Therefore, as far as the “fin” in Fintech is concerned, Hong Kong is the place to be for Fintech companies interested in expanding into the APAC region.
2. Hong Kong is integral to the GDHKM Bay Area in promoting Fintech
First introduced by the Chinese government in the 13th Five-Year Plan for Economic and Social Development, the GDHKM (Guangdong-Hong Kong-Macau) Greater Bay Area comprises the two Special Administrative Regions of Hong Kong and Macau and the nine municipalities in the Guangdong province, including Shenzhen, which is easily accessible across the border by metro from Hong Kong.
Developing a FinTech sector requires a highly skilled tech workforce with an agile mindset, and while Hong Kong lends its expertise as an international centre for diversified financial services, Shenzhen is home to 80 listed tech companies, including some of the biggest tech giants in China, including ZTE, Tencent, Huawei, as well as China’s first digital bank initiated by Tencent, WeBank. In fact, Shenzhen is in itself a regional tech and financial centre, with the top 200 global tech companies listed on the Shenzhen Stock Exchange (SSE) ranking No. 5 worldwide.
The Bay Area project, which represents a commitment and strategic thrust to deepen cooperation and integration amongst the different regions, would thus create the perfect synergy between finance and technology. This was reiterated in the “Guangdong, Hong Kong and Macau Greater Bay Area Development Plan Outline” (粤港澳大湾区发展规划纲要) released by the Chinese government in February 2019, which places heavy emphasis upon Fintech and the need for greater cooperation to develop the scene.
In short, the city’s proximity to China and Shenzhen in particular bodes well for the development of Fintech going forward.
3. Strong government support for Fintech
Besides, the Hong Kong government has taken strides to indicate their support for the development of Fintech. In 2016, the Hong Kong Monetary Authority first established the Fintech Facilitation Office to facilitate the healthy development of the fintech ecosystem in Hong Kong and to promote the city as a Fintech hub in Asia. In addition, a Fintech supervisory sandbox was launched to allow partnerships between financial institutions and tech firms to conduct pilot trials of their Fintech initiatives, expediting the launch of new technology products at a lower cost. As of February 2019, the sandbox has seen 46 pilot trials.
The Hong Kong government’s 2018 budget also pledged to allocate HK$500 million to the development of financial services over the next five years, including Fintech. You can read more about Hong Kong’s Fintech landscape here.
4. It is a great place to do business
Hong Kong has also been consistently ranked as one of the most competitive economies in the world and best economies to do business, ranking 4th in the World Bank Doing Business 2019 report. Apart from the ease of obtaining business licenses, the city imposes some of the lowest taxes in the world, with incomes sourced from the city being taxable under the regime. Corporate profits tax are two-tiered, with the first HK$2m profits taxed at 8.25% while the outstanding will be taxed at 16.5%. Apart from that, the city has a reputation for its strong intellectual property and regulatory framework, is one of the least corrupt economies in the world, and is also ranked consistently as the world’s freest economy.
Last but not least, while most locals converse day-to-day in Cantonese, English is the official business language in Hong Kong! This makes it easy for you to assimilate and you don’t have to worry about not being able to communicate effectively to get your business done here.
5. It is a great place to live at the heart of Asia!
What’s more, Tokyo, Seoul, Singapore, Shanghai, Beijing – all up-and-coming tech and Fintech hubs, are just but a few hours away from Hong Kong. As a transportation and transit hub, Hong Kong sees more than 100 airlines with operations here, providing over 1,100 flights a day to more than 220 destinations worldwide, making it an extremely convenient place to travel to and from.
Also, despite constantly being in the news for sky high rents and its congested spaces, the city provides one the world’s most public transport, amazing food, and beautiful natural landscapes to take a breather from the hustle and bustle of the city.
This is why Hong Kong has been a rising Fintech hub in recent years, with well over 500 Fintech start-ups. According to Accenture, Hong Kong Fintech companies have seen investments double year on year between 2015 and 2017. They have also raised a total of US$940 million since 2010, which is nearly one-third more than the amount raised by Australian Fintech startups and more than double that raised by startups in Singapore and Japan.
Are you a Fintech or Blockchain startup interested in joining our accelerator programme or expanding your operations to Hong Kong and having a space in our office? Reach out to us by e-mail at email@example.com.