Why can’t youngsters in Hong Kong build technology companies like Facebook and Google that fundamentally change the world?
Popular financial columnist and Hong Kong Economic Journal chief adviser Cho Yan-chiu shared his view in a recent interview with master-insight.com.
Property developers, with their hegemony over the city, have sucked up most of the resources in Hong Kong, the online media outlet quoted Cho as saying.
Rents are so high that even people who are established in business find them expensive, he said, so how can young people start their own businesses?
Even a garage is a luxury
“In Chinese society, people usually go rent-seeking after economic development reaches a certain level. However, becoming a landlord is the most unproductive thing to do for the economy as a whole,” Cho went on.
“Nowadays, people are still being proud of having property tycoons like Li Ka-shing and Lee Shau-kee in our society. What a laugh, particularly in foreigners’ eyes!
“I have to criticize the developers here. Has there been any improvement in their construction techniques over the last 30 years? None.
“People are using modular techniques to build prefabricated houses overseas — how about Hong Kong?
“Developers are just best at taking full advantage of asset inflation to wring out the last drop of profit.
“We keep telling our young people to develop their career in the high-tech industry, but where does the money come from?”
Steve Jobs, the late co-founder of Apple, built the world’s first commercial personal computer — together with Steve Wozniak — in the garage of his house.
At least Jobs could use the garage as a workshop, Cho said.
“In Hong Kong, even a parking space is a target of speculation, let alone a garage,” he said.
There are no angels, only devils in Hong Kong
Thinking about the next generation and the future of Hong Kong, Cho can’t help asking, “Where are the angels?”
Angel investors are quite common overseas.
“If you have an idea, you can approach them, and these funds are mostly willing to invest US$1 million to US$2 million in a start-up,” Cho said.
Following initial signs of success, “they will inject more funds and also help with the management and expansion of the business.
“That’s why most of these start-ups can afford to start making money after 10 to 15 years.
“Tech behemoths such as Facebook and Twitter all relied on venture capital at the very beginning.
“In contrast, there are no angels but only devils in Hong Kong.
“Those huge property developers, though making billions and billions of dollars, refuse to allocate a small part of that profit to help young entrepreneurs develop their businesses.”
The Hong Kong dream: to be a landlord
In Cho’s view, that is part of the reason that Hong Kong has totally failed at economic transformation and innovation.
“In the United States, everybody has a dream,” he said.
“Their dream is to innovate and set up companies like Apple and Facebook; but in Hong Kong, the collective dream is to buy flats.”
Property titans are too successful and profitable to need to venture into the technology business.
But since they control the city’s resources, if they are not interested, the rest of society simply can’t afford to try.
If young people follow the mentality of the developers and focus their energy on owning properties, Cho questioned whether it will be possible for Hong Kong to innovate.
“The saddest thing is the dream of many college students is to become a landlord,” he said.
Lucky ones backed by a rich dad may be able to buy a property before 25, Cho said.
Still, they will be about 45 when they finish paying off the mortgage.
By that time, it’s already too late to venture into a new business, he said.
“That’s why I often tell young people not to let a 500 sq ft unit tie them down while they are still young,” Cho said.
He also blasted the government, blaming runaway property prices on its restrictive land supply policy.
“Hong Kong society encourages people to gain without putting in the effort, while the system, at the same time, punishes those who work hard to start their own business,” he said.
Sadly, Cho seems to think that isn’t going to change in future.
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