Hong Kong’s sovereignty returned to China in 1997 but the Chinese government has found it hard to convince some Hongkongers, especially the younger generation, that it’s been a welcome homecoming to their historical and cultural roots.
The territory’s relations with its northern overlord have sometimes been fraught (see WiC136 for an earlier report on this theme six years ago). Discontent reached new levels in 2014 when thousands of young activists blocked main roads for months in a campaign of civil disobedience calling for greater electoral freedoms (see WiC244).
Beijing’s response is to try to find ways to give younger people more hope for the future, economically at least. This unstated policy was evident again when President Xi Jinping visited the city last year to celebrate the 20th anniversary of the handover. The Chinese leader took time to meet with the territory’s business leaders and urged them to take “a leading role” in two important tasks: caring for the younger generation and enhancing cooperation with mainland China.
Social mobility in Hong Kong has been suffocated by runaway property prices and in a “crony-capitalism index” compiled by The Economist in 2014, the city was top of the pile with nearly 80% of its GDP under the control of a handful of real estate tycoons (Russia took second place).
The extension to this argument is that the concentration of economic power is undermining Hong Kong’s creative potential. On a more mundane level, the high cost of living plays a key role in shaping the risk-adverse attitude of its people – simply put Hongkongers can’t afford to be entrepreneurs.
Into this context step forward two of China’s most powerful companies, the internet duo Alibaba and Tencent, which have been enlisted by Beijing’s to help win back Hong Kong people’s hearts and minds.
Alibaba has established the Alibaba Entrepreneurs Fund (AEF) to help young Hong Kong people (as well as Taiwanese) “realise their dreams and visions”. Up to HK$1 billion has been set aside in funding and as of this month 16 start-ups in the territory have received investment from Jack Ma’s e-commerce giant, including delivery service GoGoVan (see WiC379) and online cooking tutor DayDayCook.
The success of companies like these at least provides a template for other entrepreneurs, who have found opportunities harder to exploit in such a high-cost location.
Start-ups in Hong Kong have complained about a host of challenges including a shortage of investor capital – a paradox in one of the world’s leading financial centres.
Putting things into perspective, Horizons Ventures, the private investment firm of Hong Kong’s richest man Li Ka-shing, has invested billions of dollars in overseas tech firms and start-ups. But it wasn’t until last October that it put any money into a local tech start-up – artificial intelligence firm MioTech.
Local commentators say that Hong Kong should also be doing more to exploit its competitive strengths, especially the city’s universities, which are strong in artificial technology, robotics and medicine.
Tencent, meanwhile, has teamed up with Hong Kong’s Science and Technology Park in another bid to boost the start-up sector. Projects like these have been controversial in the past. One major deal in 1999 to turn a prime waterfront site into a Cyberport, or Hong Kong’s answer to Silicon Valley, ended up as a second-tier commercial and prime residential property development (owned by the younger son of Li Ka-shing). In another much-heralded plan, the Growth Enterprise Board (GEM) was launched in 2000 as a fundraising platform for new tech firms. But the bourse withered quickly after a trio of tech spin-offs – linked to the city’s biggest property firms – all failed to take off (SUNeVision, born from the city’s biggest property firm Sun Hung Kai, has since become a commercial landlord for data centre operators).
Perhaps the chances of success will be higher if Alibaba and Tencent are pushing the initiatives, rather than the property barons. But in fact, some of Hong Kong’s most powerful property firms have already teamed up with the Chinese duo to try to bring more tech excitement to the local economy.
In one of the most striking partnerships announced in October last year, Alibaba’s payments affiliate Ant Financial launched a joint venture with Li Ka-shing’s CK Hutchison to develop its Alipay service in Hong Kong (see WiC383). The move came shortly after a visit by Hong Kong’s chief executive Carrie Lam to Alibaba’s Hangzhou headquarters.
During that meeting, Alibaba’s boss Jack Ma told Hong Kong’s top official that his firm was keen to play a bigger role in helping Hong Kong develop into a “more fashionable” cashless society.
The remark looked to be a thinly-veiled jab at Hong Kong’s popularly used digital payment product, Octopus, which is owned by the city’s railway monopoly MTR Corp. A lot of locals have preferred to stick with the familiar Octopus, even if the 21 year-old card looks tired in tech terms.
Tencent has also been trying to shake things up in Hong Kong. It signed an agreement with MTR late last year in which the local metro firm will allow its passengers to use WeChat Pay to purchase train tickets. Last month there was another announcement for MTR’s Shenzhen network, in which the railway firm is teaming up with Tencent to allow passengers to pass through the station gates by swiping QR codes on their phones.
The second project is a part of Tencent’s much wider ambitions to develop a WeChat-based, “E-card” ID system for travellers in the Greater Bay Area, a government scheme to embed Hong Kong in an integrated hub encompassing a number of other cities in the Pearl River Delta.
In another statement this month, Tencent said it was working with the Chinese authorities to roll out its biometric data-based E-card. The unusual proposal would see multiple travel documents linked to WeChat, allowing for swifter border crossings, although there is no timetable on when it might be rolled out.
Another outcome of this “one mobile, seamless travel” proposal is that the contentious political debate in Hong Kong about a joint checkpoint plan for the Guangzhou-Shenzhen-Hong Kong high speed railway would become unnecessary (see WiC307).
On the same day that Tencent launched its E-card idea, Alibaba announced that its logistics affiliate Cainiao will form a joint venture to build a $1.5 billion ‘smart logistics’ centre at Hong Kong’s international airport. Alibaba said the move is part of a commitment to invest over Rmb100 billion ($15.37 billion) in a global logistics network. That aside it shows how both the Ma tycoons are keen to be seen to be supporting the Greater Bay Area concept.
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