Hong Kong as startup hub for hardware startups
What can Hong Kong mean for (Dutch) hardware startups?
Hong Kong startups has many similarities with startups The Netherlands in the way of challenges and knowledge. This is the first in a series of blog posts and in this post I will highlight the Hardware part of Hong Kong, other posts will be about startups in: Logistic, Finance and Garments.
The Netherlands has a history in hardware, Philips is “home grown” and we have one of the best technical universities; TU Delft. When it comes to hardware, Hong Kong has some big advantages, it has the world’s factory in his back yard and is just a train ride away from HQB, Shenzhen’s electronics market with every component you can think of, really, it’s geek heaven, name it and you can just buy the component in the afternoon and put it on your board in the evening.
Hong Kong also have accelerators like Brinc.io that have a 100% focus on IoT. Brinc.io’s COO Bay McLaughlin says this about the Hong Kong ecosystem:
“Hong Kong is literally heaven for IoT founders who know they need to be learning about and working with China. It’s still possible to do early production runs elsewhere but if you’re serious about building an IoT company to scale, I always recommend starting here. With its proximity to the Pearl River Delta, Hong Kong is strategically positioned for IoT founders to leverage the best of both worlds. Access to product development and manufacturing talent and partners is unmatched and all the basics you’d expect as a westerner are covered: great coffee shops, amazing bars and restaurants, good Internet, an outdoors culture, and an amazingly efficient transit system (no need to commute for hours here).”
In the last 4–5 years I’ve personally seen Hong Kong Startup community grown from one community and one co-working space to at least 7 different communities and 41 oh no, 42 wait, 41 no, 43! co-working spaces. And obviously there is room for more, because WeWork is also coming to Hong Kong. And there is a reason for that, the convenientness of the city, it’s location and historical knowledge. Beside Brinc.io there is also a co-working space Makerspace by The Hive and the good old Hackerspace Dim Sum Labs by local maker enthusiast that also give workshops on a regular basis. Those are 100% focused on hardware / IoT.
China is close, but not too close.
Besides the proximity to Shenzhen’s Huaqiangbei (HQB is IMHO the biggest electronics area in the world), Hong Kong has great internet connections. FTTB/FTTH of 1Gb are well covering the most populated areas of the city (and normal access to Facebook and Twitter, no Great China Fire Wall). You can get around with English pretty well. It has Common Law based on the English laws and “only” max 17% income tax. Staff wise: a fresh grad will cost you Euro: 1,500 a month, office hours are long (9–19 is normal) only real estate is expensive. Getting an office in Central is for 99.99% of the startups unthinkable, beside an virtual office that is. That’s why a lot of startups have offices in Sheung Wan and Quarry Bay if they are not in one of the 43, wait now it’s 44 co-working spaces. Also the startup visa is specially set up for founders and their key staff to live and work legally in Hong Kong.
Florian Simmendinger is the co-founder of Soundbrenner, an IoT device for musicians. His company moved from Germany to Hong Kong specially for this:
“We started our company in Berlin in Germany because that’s where we were living at the time. We didn’t really consider advantages and disadvantages of our location until we met Brinc. They invited us to come to Hong Kong. We agreed to move temporarily, mostly because we wanted to work with Brinc. Once we were in Hong Kong we very quickly realized that its the best place in the world to start a IoT company. You get an amazing, business friendly legal system as well as an international city with a high quality of life and talent. Most importantly you gain access to the amazing hardware ecosystem in China. You have suppliers for components, packaging, cables right in front of your eyes. Service providers for certifications and consulting too. And of course manufacturing itself. In Asia you have way more know how when it comes to designing and manufacturing electronics than anywhere else in the world. Finally logistics and distribution are very important for a hardware company and both are strong points here in Hong Kong.”
Florian Simmendinger continues: “I’m not going to lie, there are things about Hong Kong that can pose a problem for startups. Cost of living is one, a very young startup scene is another. That being said the startup scene is so rapidly growing that its mindblowing and living costs can be overcome. In conclusion we decided to stay in Hong Kong and so far things have played out extremely well for us. One final word for fundraising — it can be done in Hong Kong. We are currently in the process of raising our seed round of several thousand USD and were able to gain several commitments very quickly. “
Hong Kong is indeed also the domain of a lot of small workshops, all over the city, that can make everything for you, plastics or metal, small MVP quantities are easy to get. Also is there a local startup that builds 3D printers and on the side have a little factory that can produce kickstarter amount of 1st orders. When you need more in quantity, China is just an hour away with a lot of factories and Hong Kong has a lot of people that are experienced with manufacturing in China and are able to get you the quality your customers deserve.
As for the future of Hong Kong as a startup hub, Brinc.io‘s Bay Mclaughlin says: “As a co-founder of an IoT accelerator based in Hong Kong, I can say without apprehension that this city will be known as the IoT capital of the world within the next few years.”
So are you a hardware startup in The Netherlands (or anywhere else for that matter) and looking where to produce your first orders where not everything is fixed yet? Keep Hong Kong in mind as a place to (temporarily) set up shop.