Techsauce Global Content Editor Chaowarat Yongjiranon gets insight on the situation in Hong Kong from James Kwan, the managing director of Jumpstart Media.  

• Protests shuts down tourism businesses and main startup events.

• Startup ecosystem resilient, but there is already talks of moving bases overseas. 

• The private sector is stepping in to support businesses, but is it enough?

• A great opportunity to visit Hong Kong on the cheap?

It has been a whirlwind situation in Hong Kong as protests continue on the streets after the Hong Kong Government withdrew a controversial extradition bill in September.  The protests that has become somewhat violent has completely disrupted Hong Kong’s economy, which is set to enter into recession as the number of tourists have fallen since the first half of 2019 according to Business Insider.

Check out our conversation on Techsauce Global Podcast at the following links: 

Spotify : https://spoti.fi/37JVmyg Podbean : https://bit.ly/2OOY24V SoundCloud : https://bit.ly/2KZ5HwD 

Techsauce got in touch with James Kwan, the managing director of Jumpstart, Hong Kong’s first print publication geared to startups and small businesses, to get an insight on how the protest are impacting the startup ecosystem.  Here are the key takeaways from our Techsauce Global Podcast talk. 

The psychology of Hong Kong has changed 

Abrupt protests on the streets of Hong Kong have dwindled the number of tourists arriving to what was once the world’s most visited city in 2018 with a record of 30 million visitors according to Euromonitor International.  Now, the total sales volume among retailers has dropped by 25% YoY.  The tourism sector says the situation is worse than the SARS outbreak shutting down the city in 2003.  Hotels according to Kwan, are at least 70% empty.

Things are bad. Its especially bad for the small mom and pop stores located in tourist spots such as Tsim Sha Tsui.  Kwan says,

The psychology of Hong Kong has changed because when you see one sector being hurt, I think other sectors are going to be more weary about spending their money on non-essentials at this point.

The level of confidence among businesses is low.  Kwan has never seen such high level of caution among businesses in the 11 years he has been working in Hong Kong.  No one expected the protests to last this long and the tricky thing is, most people, including Kwan cannot really predict when it will end. 

Startups resilient, but there is talk of moving overseas

The startup ecosystem in Hong Kong, just like others around the world has always been resilient, given the tough nature entrepreneurs must have to survive.  However there is no denying that the cancelations of big events has impacted the community.  Hong Kong’s largest tech conference, RISE, has already been canceled for 2020.  The cancellations have impacted startups who have already earmarked money to present their businesses at the shows.

According to Kwan, some companies are scrambling to recover because RISE canceled their booths and the show won’t go on.  So they are looking for replacements if they want an entry point into Asia.  According to Kwan, the psychology of startups has changed with many eager to look overseas.  If it has not been in their conversations, it is definitely being discussed now.  Kwan says the resilience of a startup depends on its founding team.  Right now founding teams are definitely looking outside Hong Kong for resources.

The founding teams are definitely going out and looking for resources outside of Hong Kong, possibly setting up a second headquarter or replacing a headquarter.

Startups cannot rely on the traditional investors in Hong Kong, who are now cautious.  Kwan says angels who are just coming out or learning to be angels may have to pause.  So there needs to be alternative sources for fundraising from regions such as Southeast Asia, the United States, and Europe.  Kwan says every startup needs a contingency plan.  A possible location for startups to move their bases or extend their team to, is Singapore, which is considered a soft landing base. 

There’s been rumblings in the street.  People looking to possibly relocate.

Private sector steps up to help

Kwan says there has always been support from the government for businesses, but so far it has been unclear on how they will help affected businesses.  There has not been anything solid announced among the wider circles on how the assistance will be. Kwan says,

“I think the government has always been supportive.  I don’t know of their reaction time to what is happening with the protest would be as fast as the private sector.  

Property companies, giants of the private sector on the other hand, has stepped up to lend a hand.  New World Development has donated 20% of the company’s farmland for future affordable housing.  Henderson has also donated a sizable amount of money to help SMEs impacted by the protest. 

According to Kwan this is quite unprecedented, given that a lot of the developers are what he calls, “profit-making machines”.  Ultimately Kwan says it will take time for the help to trickle down to the rest of the society.  Overall he says both the private and government sectors recognize the GDP will decline and something needs to be done.

How can visitors navigate through the protests?

Certainly there are still people who may have to visit Hong Kong.  Kwan says there is nothing to worry about.  Visitors can use an app used by protesters and locals to monitor the situation.  It is called Telegram, an encrypted message app that allows users to disguise their telephone numbers to safeguard HK protesters against monitoring by authorities.  Protesters use the app to announce where their next protest will be. 

Like most countries that have seen unrest, the media tends to focus on the most violent part of the conflict.  In Hong Kong, these areas of protest are in isolated locations.  According to Kwan, 

 “Life still goes on in the other 90% of the city.”

The government continuously informs the public of what areas are occupied.  Meanwhile, Kwan says protesters are focused on the mission of letting the international community understand what is happening in Hong Kong.  They pose no danger to tourists because they understand the dynamics of the city.  

In fact, Kwan says this is a good time for visitors to get good deals.  Hotels have reportedly lowered their rates and are giving visitors extra perks like free brunches.  

Kwan leaves us with a lighter and hopeful note. 

It is a very important time in HK history.  It’s good from a historical prospective, for a shopping perspective, from a deal perspective. It is a great opportunity to see HK on the cheap.