Jan 10, 2011
It’s the oldest question in the field of entrepreneurship policy: how can you transform your city, state or region into the next hotbed of entrepreneurial activity a la the Silicon Valley?
This question occupies policymakers even here in Boston, a place with some of the world’s best universities, a vibrant start-up scene, great facilities and great weather all year round (OK, maybe not that last one). Point is, even with some of the world’s best resources it is really hard to create an environment where you will see a hundred Googles bloom. So what do you do when you don’t have quite the same environment? What if you are a smallish, over-populated island still recovering from a colonial hangover and are in an uneasy relationship with the world’s most powerful communist government? What if you are Hong Kong and you want the next Facebook to emerge at home? This series of articles aims to find out what happens when one of the world’s most efficiently run public systems tries to buy something more intangible — “the entrepreneurial spirit”.
It’s pretty hard to not be impressed on your first trip to Hong Kong. The Hong Kong International Airport (completed in 1998 at a cost of USD 20 Billion), built on an exclusively designed artificial island connects you seamlessly via an impressive intra-city subway system that is clean, reliable, fairly inexpensive and yet not overly crowded. Given that this tiny island houses over 7 million people (making it the 4th most densely populated country in the world after Macau, Monaco and Singapore) it is a miracle that the public systems run as well and efficiently as they do. The trains shuffle millions of people back and forth between the island and the mainland, the buses ferry bankers and late night party-goers alike through the island’s hilly and narrow streets and a large complex of government buildings houses what must be thousands of bureaucrats who deal with everything from your immigration documents to your taxes. Unlike most places, “government” in this part of the world signifies quiet and solid efficiency. And my examples are not an exception. There is something pervasive and unbelievably different about the culture of the place. I once saw a worker for the subway system hard at work scrubbing a small smear off of a railway platform with a metallic brush in the middle of the day! I am from India, and nothing in the government there works as well as this. Ever.
So, that brings us to our big question. Sure, the government can create a great transport system, a safe working environment for one of the world’s most important financial centers and can set up some of the world’s most beautifully scenic tourist locations (Ngong_Ping_360) but can it engineer an entrepreneurship revolution? Can efficient bureaucracy and wads of cash substitute an irreverent entrepreneurial verve? In the late 1990s the HK government didn’t know the answer, but they were sure going to try finding out!
This is how they were going to do it. They were going to get some beautiful scenic property close to one of Hong Kong’s large universities and they were going to build a technology park. Or more specifically the “Hong Kong Science and Technology Park” (HKSTP). Then, they were going to incubate what they thought were the most promising start-ups in a variety of areas including hardware, internet software, biotechnology, computer animation and video game design. These “high growth” start-ups would then be supported with dirt-cheap office space, opportunities for seed funding (usually via the park’s connection with angel investors and venture capitalist), high quality mentorship and then after three years packed off into the world to become the world’s next Amazon. At least that was the plan.
The project was kick-started gently in the mid 1990s and has now grown to have over 300 firms under incubation. According to their website: Built along the waterfront, the 22 hectare Hong Kong Science Park provides 20 state-of-the-art laboratory-fitted buildings offering 220,000 square meter office space. Having read this, I was curious. Even after a good 10 years since the project has begun, Hong Kong is not exactly an ideal location for technology startups. China’s largest social media company (and indeed one of the internet’s most important social software companies) Tencent (with ~400 million users) is based in Shenzen, a hop-skip-and-a-jump away from Hong Kong, right on the Mainland. One of Hong Kong’s prominent internet startups, the social gaming company 6waves was not an beneficiary of the program. But perhaps there have been others that I’ve missed? Clearly there was.
As a student of entrepreneurship, being in Hong Kong meant I had to find out what was happening on the ground. This needed a proper investigation! Well, when I say “investigation” I mean interviewing the CEO of the park in his plush conference room overlooking the ocean, not really hanging out in seedy bars at night, but an investigation nonetheless. While I was at it I would also mingle with a few of the resident companies of the park and ask them about their thoughts on the advantages of such a program. Over the next two articles I will summarize the results of my investigations and relate that with academic literature in this area.
Net, net, the Hong Kong story, as it has played out so far, is a mixture of hits and misses. But most importantly it has crucial lessons for all those interested in understanding the nature of innovation clusters. So watch out for more from me, including details of the interview and my assessment of what works and what does not. Stay tuned!