Hong Kong: Business Angel and Startup Finance - Investing in Hong Kong – Part 5 Government Technology Policies

Last Updated: 27 May 2010
This article is part of a series: Click Business Angel and Startup Finance - Investing in Hong Kong – Part 4 Financial Infrastructure for the previous article.

By John Lo, Partner, Corporate, King & Wood, Hong Kong

Editor's note – This series of articles explains the opportunities for business angel investment in Hong Kong. Part 1 Introduction – introduces angel investment in Hong Kong. Part 2 discusses the startup scene in Hong Kong, Part 3 outlines the profiles of business angels and networks, Part 4 describes financial infrastructure, Part 5 covers Government technology policies, Part 6 presents recent examples of success stories in the tech sector.

Nurturing the growth of a science and technology focused sector became a significant part of the government policies of the first post-1997 administration. Under the guidance of the late Professor Tien Chang-lin, former chancellor of University of California, Berkeley, the government issued a technology blueprint for Hong Kong shortly after the changeover, which led to a new period of innovation and growth in the tech sector.

These included the establishment of the following:

  • Hong Kong Science & Technology Parks
  • Hong Kong Applied Science and Technology Research Institute
  • Various funding schemes managed by the Innovation and Technology Commission

The main location of the Hong Kong Science Parks located at Pak Shek Kok - now comprising around a dozen state-of-the-art multi-story buildings under its first two phases of construction - stands as a visible testimony to Hong Kong's attempt to put itself on the yellow brick road of innovation and technology. In addition to established tech companies and R&D facilities, its current occupants include some 100 startup companies under its incubation program. Since the program's inception, more than 200 incubatees have graduated.

The Hong Kong Applied Science and Technology Research Institute ("ASTRI"), modeled after the successful Industrial Technology Research Institute ("ITRI") of Taiwan, was established in 2000 and is engaged in mid-stream R&D in IC designs, communications technologies, enterprise & consumer electronics, and material & packaging technologies. At the end of 2008, ASTRI employed more than 340 researchers.

The Innovation and Technology Commission is an executive government body under the Communications and Technology Branch of the Commerce and Economic Development Bureau. It manages various government innovation and technology funds focused on helping local businesses in the relevant sectors. Among various funding schemes pertinent to startup financing, is the Small Entrepreneur Research Assistance Program ("SERAP"), which provides pre-VC stage financing to startups.

In addition to the above initiatives, the government has had a long-standing policy to invest substantially in higher education. Despite its relatively small size, Hong Kong has eight universities, some of which have won academic acclaim worldwide and are highly ranked in selected fields. Universities in Hong Kong have regularly achieved breakthroughs and successes in their research efforts. Many made significant efforts to commercialize their research results.

In April 2009, based on the recommendation of a government appointed economic advisory committee, Chief Executive Donald Tsang announced that Hong Kong should focus on and encourage businesses in six major industrial areas where Hong Kong is believed to have competitive advantages. These areas include innovation and technology, the cultural and creative industry and the environmental industry.

Some critics charge that much more could have been done by the government to help innovation and technology based entrepreneurial pursuits. None would dispute that the policies now in place, however, are vast improvements compared with the virtual absence of government support under the so-called "Positive Non-interventionist" policies of the pre-1997 British administrations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Business Angel and Startup Finance - Investing in Hong Kong – Part 4 Financial Infrastructure for the previous article.
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