HK must become Asia angel investment hub: Victor Fung

December 01, 2014 18:07
Hong Kong needs to encourage angel investors to ensure the creation of a new wave of start-ups, says Victor Fung. Photo: HKEJ

Hong Kong must encourage angel investors and try to become the top center for such investments in the Asian region, said Victor Fung, the chairman of global sourcing giant Li & Fung Ltd. (00494.HK).

The city should foster many more "angels" to ensure capital for start-ups, he said, adding that such efforts will help the local economy weather the challenges stemming from supply-chain management changes and the online-to-offline business model.

"Hong Kong needs to fully utilize its advantage as a commercial hub by not only upholding its role in renminbi internationalization, but by also investing in innovative businesses," Fung said Monday at an economic summit co-organized by the Hong Kong Economic Journal.

"Now we not only need venture capital, but also angel investors who put money in start-ups. I saw a great deal of that in Silicon Valley, but not here or in Asia," he said.

Hong Kong investors are rather conservative when it comes to betting on start-ups even though the support system for entrepreneurial ventures has improved over the past five years, a survey conducted by Google Inc. and the Chinese University of Hong Kong showed in September.

Only 6 percent of some 600 interviewed entrepreneurs said they availed of bank loans to secure initial capital, while just 8 percent said they used funds from risk-bearing investors.

Fung said Monday that it is important for Hong Kong to be the angel investing center in Asia, given that the city needs to look outward.

"We cannot just be bound in our own market," he said.

"China is an opportunity for Hong Kong to build a new economy," he said. "It would be a good opportunity if southern China can be another free-trade zone."

Fung reminded that Hong Kong needs to uphold business confidence if it wants to lure entrepreneurs.

The city needs to beef up its technological innovation and human resources, he added.

"We need to train up technicians," he said, noting that the city has not been focusing enough on technical colleges.

If young people are given enough opportunities, it will reduce social discontent and help improve the local political climate, he said.

"If there is opportunity for young people to start their own companies, they will have a chance to move upward," Fung said.

In other comments, he said that people should always keep in mind economies of scale when starting a new business. In new-economy sectors, entrepreneurs should figure out where their big market lies, and plan accordingly, he said.

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Ayishah Ma is a financial reporter on Greater China issues.