Despite the challenges of the Covid-19 pandemic, the Thai economy is on track to expand 3.9% this year after posting a modest 1% growth in 2021 as consumption and business activities return to pre-pandemic levels, according to the World Bank.
The Southeast Asian economy has come a long way since contracting 6.1% at the height of the Covid-19 outbreak in 2020, thanks to the government’s initiatives to bolster economic growth by encouraging domestic consumption, supporting local entrepreneurs and promoting exports.
With the policies in place, the twin pillars of the economy: domestic consumption and exports are poised for even higher growth. Exports are predicted to grow by at least 5% this year, while private investments will likely increase between 4% and 6%, according to the Ministry of Commerce.
“We are promoting the consumption of Thai products to build confidence and also to encourage the use of our products as raw materials to create added value,” says Deputy Prime Minister and Minister of Commerce Jurin Laksanawisit, adding that Thailand will be focusing on programs that have already proven themselves successful.
The government is also bolstering the new economy by promoting and developing online marketing platforms. “We are developing entrepreneurs to take advantage of the platform economy and online commerce,” Jurin says.
To stimulate innovation and encourage younger generations to become involved in the economy, “we will continue our initiative on human resource development for students to build more entrepreneurs,” says Jurin. “One of our programs, from Gen Z to CEO, focuses on helping the youth become entrepreneurs. In 2021 we had 20,000 participants and we aim to have another 20,000 this year.”
To build sustainable growth, the government is promoting environment friendly economic development using the bio-circular green (BCG) economic model, which leverages technology and innovation to add value to goods and services while mitigating negative environmental and sustainability impacts. The BCG model will be applied in agriculture and food; health and medical; energy, materials and biochemicals; as well as tourism and creative economy.
Thailand will apply the bio-circular green (BCG) economic model in agriculture and food; health and medical; energy, materials and biochemicals; as well as tourism and creative economy.
To support exports, Thailand will foster closer cooperation with members of Association of Southeast Asian Nations as well as Asia-Pacific Economic Cooperation. “We look forward to closer cooperation with APEC member countries as Thailand will host APEC this year,” Jurin says. “We are also redoubling efforts to expedite trade between Thailand and other markets, including China, the US, the EU, countries in the Middle East and Russia.”
In addition to bilateral trade agreements, “we will also be working on more sub-country trade agreements,” says Jurin. Thailand will continue to forge trade agreements with markets in state, provincial or regional areas instead of whole countries. After signing sub-country trade deals with Hainan, China and Kofu, Japan last year, Thailand plans to seal similar accords with other localities in China and India.
Although the pandemic has undoubtedly been the main focus of governments around the world over the past year, an even greater challenge lies on the horizon: climate change. It’s a challenge that Hong Kong is meeting head on, not only by setting stringent climate goals such as becoming carbon neutral by 2050, but also through innovative environmental, social and governance (ESG) strategies and green and sustainable finance initiatives introduced by the Hong Kong Monetary Authority (HKMA). To date, Hong Kong is the first Asian jurisdiction that has committed to align specifically with the recommendations of the Task Force on Climate-related Financial Disclosures by 2025 across relevant sectors.
“The HKMA seeks to make our contributions in this area by leveraging on our role as a regulator, a major investor, as well as an active participant in international financial forums,” says Eddie Yue, Chief Executive of the HKMA.
A Three-Pronged Strategy
Underpinning much of the HKMA’s strategy are three initiatives outlined as early as May 2019. The first initiative is to promote green and sustainable banking. The first phase of work to develop a common framework to assess the “Greenness Baseline” of individual banks has been completed. Currently, in the second phase, the HKMA, in consultation with the banking industry, is formulating supervisory requirements on managing climate-related risks. Meanwhile, the HKMA has also launched a pilot exercise on climate risk stress testing in early 2021 to assess the climate resilience of its banking sector. The third phase will be for banks to implement the finalized requirements.
The HKMA’s second initiative seeks to cultivate a responsible investment (RI) environment by weaving ESG factors into the investment process of the Exchange Fund (EF), as well as giving priority to ESG investments when long-term risk-adjusted returns are comparable to other investments. “As one of the largest reserves managers globally, we embrace responsible investing,” says Yue. “ESG principles are now an integral part of our investment criteria, processes and asset allocation.”
Some examples of the RI efforts are:
Gradually building up EF’s investments in green bonds, ESG-themed equity mandates, and other green investments such as renewable energy and green buildings.
Embedding ESG factors in the selection, appointment and monitoring of the HKMA’s external managers of public assets and examining ESG policies and practices of general partners as part of due diligence of private market investments.
Incorporating ESG factors in the credit risk analysis of bond portfolios.
The HKMA’s third initiative is the launch of the Centre for Green Finance (CGF) to serve as a platform for technical support and experience sharing for the green development of the local banking and finance industry.
“As one of the largest reserves managers globally, we embrace responsible investing. ESG principles are now an integral part of our investment criteria, processes and asset allocation.”
–Eddie Yue, Chief Executive of the HKMA
Taking the Lead
In May 2020, the HKMA joined forces with the Securities and Futures Commission to initiate the Green and Sustainable Finance Cross-Agency Steering Group. The Steering Group has set out five near-term action points, including achieving mandatory climate-related financial disclosures by 2025 and adoption of the Common Ground Taxonomy now being developed by the International Platform on Sustainable Finance.
Building on its status as an international financial centre, Hong Kong has also been quick to take on regional leadership roles for green finance initiatives pushed by supranational bodies such as the World Bank. For example, the HKMA is a founding member and the first regional anchor for the Asia Chapter of the Alliance for Green Commercial Banks, a global scheme launched by the International Finance Corporation (IFC) that encourages commercial banks to adopt greener investment practices.
“The HKMA’s vision and continued progress toward making Hong Kong a prominent green finance hub for Asia makes it the ideal inaugural partner to mainstream green finance in [the region],” said Stephanie von Friedeburg, Senior Vice-President of Operations at IFC, in November 2020.
Funding the Transition
Another area of green and sustainable finance in which Hong Kong is leading the way is its green bond strategy. Quick to recognize the value of a global market that HKMA’s Yue highlights has grown from practically non-existent ten years ago to US$290 billion annual issuance in 2020, the city has been enhancing its role as a regional green and sustainable bond hub. This includes providing the necessary infrastructure and catalyst for market development, such as the Green and Sustainable Finance Grant Scheme to provide subsidies for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services, while supporting international initiatives and alignment. In 2020 alone, US$12 billion green debt were arranged and issued in Hong Kong, with one-third of the issuers being first time issuers in the city. This is in spite of the disruptions caused by the pandemic. By the end of 2020, cumulative green debt issuance in Hong Kong amounted to over US$38 billion.
Such strengths have also come about on the back of the highly successful Government Green Bond Programme, with issuances being well received by global institutional investors. This, Yue says, is a testament to investors’ confidence in Hong Kong’s credit strengths and economic fundamentals in the long term, as well as their support of its efforts in promoting sustainable development.
Demand for the latest US$2.5 billion issuance in February was huge, and the three tranches of five-, ten- and 30-year tenors helped set a comprehensive benchmark yield curve for potential green bond issuers in the region. The pricing achieved was well within the spread of other U.S. dollar-denominated comparables over U.S. Treasuries, reflecting strong investor interest in this green bond.
The past two years may have been among the most tumultuous in its history, but Hong Kong has risen to its recent challenges in its typically tenacious fashion to position itself at the forefront of the global economic recovery. Fast to respond to the pandemic and quick to identify new opportunities arising from the related seismic global changes, the city is now forging a confident path toward a bright future in which innovation, sustainability and forward-looking development are the keys to success.
Long hailed as one of the world’s most dynamic global financial centers, with an ever-favorable environment in which to invest, fundraise and do business, Hong Kong is driving a variety of bold policies and initiatives to blaze a trail in burgeoning new industries while simultaneously enhancing its traditional strengths. Nascent fields such as biotech and fintech are already thriving in Hong Kong, while the city—from the government and the stock market to property developers and entrepreneurs—are embracing environmental, social and governance (ESG) principles to ensure that sustainability and social responsibility will underpin the territory’s future growth.
Building for the future, both literally and figuratively, Hong Kong has embarked on a number of bold development projects that will further augment the city’s competitive advantages and livability. These encompass the West Kowloon Cultural District, which includes Hong Kong Palace Museum, Lyric Theatre Complex and the eagerly anticipated M+ museum of visual culture; the multibillion-dollar airport expansion, which will reaffirm Hong Kong International Airport’s status as a leading global aviation hub; and the development of SKYCITY into a new and exciting business and entertainment complex.
Leveraging its reputation as the gateway between mainland China and the rest of the world, Hong Kong is also set to be a key city within the Guangdong-Hong Kong-Macao Greater Bay Area, driving economic growth and new opportunities for years to come.
Fundraising: A Dynamic Business Environment Where Fundraising Thrives
Hong Kong has a long-held and well-earned reputation as a world-leading financial hub, and today the city is actively building on its strengths to ensure it remains a leader in this regard. Ranked as the third-easiest place to do business in the world by the World Bank in its Doing Business 2020 report, Hong Kong benefits from stable and transparent laws and regulations, a vibrant and deeply liquid financial market, and the financial and physical infrastructure to support the world’s largest companies and investment firms.
The city provides unrivaled connectivity with mainland China’s financial markets, offering direct two-way access through the Stock Connect and Bond Connect programs, and the new Wealth Management Connect scheme. In early 2021, the Hang Seng Index demonstrated its tenacity by showing impressive early gains after falling just 3.4% in 2020. “Despite significant market volatility around the globe, Hong Kong’s capital markets once again proved their resilience. In many ways our markets came out of 2020 stronger than ever,” said Hong Kong Exchanges and Clearing Limited (HKEX) Chairman Laura Cha at the Asian Financial Forum in January.
“HKEX, and all of Hong Kong, is well positioned to serve as a vital channel for funding growth in the post-Covid world.”
– Laura Cha, Chairman, HKEX
This resiliency and potential for growth, together with Hong Kong’s world-class financial infrastructure, make it a top choice for raising funds, and the city has ranked as the world’s number one IPO venue in seven of the past 12 years. In 2020 alone, HKEX recorded a 24% year-on-year fundraising increase, raising a total of HK$398 billion (US$51.3 billion) from 154 listings. This was the highest amount in a single year since 2010 and included the second-largest listing of 2020 globally: JD.com at US$4.5 billion. HKEX is building on this momentum through innovative initiatives such as its commitment to go paperless for IPO listings—making it the first major financial market in the world to do so.
Following regulatory changes in 2018 that allowed the listing of pre-revenue companies, Hong Kong has swiftly become the world’s second-largest IPO fundraising center for biotech. The city is also a growing hub for fintech, an industry that has seen its adoption accelerate dramatically during the pandemic. “More than 60% of the IPO funds raised in Hong Kong last year came from new economy and biotech companies,” said Cha. “HKEX, and all of Hong Kong, is well positioned to serve as a vital channel for funding growth in the post-Covid world.”
In another forward-looking move, Hong Kong SAR Chief Executive Carrie Lam announced in October that the city was positioning itself as a hub for green finance. This included HKEX’s launch of the Sustainable & Green Exchange (STAGE), an online portal that is the first of its kind in Asia to provide information, access and transparency on a wide range of sustainable investment products, while connecting market participants, issuers and investors.
But while it has already enjoyed tremendous success as an international financial market, Hong Kong is poised to play an even greater role in the future. Highlighting that the global sustainable finance market has attracted about US$30 trillion in investments, and that less than 1% of that had been in Asia, Cha shared her belief that “the potential for Asian sustainable finance investment products is huge,” and that Hong Kong, as Asia’s international financial hub, is ideally placed to realize that potential.
“At HKEX we are optimistic that 2021 heralds a fresh start,” added Cha. “We are well positioned and ready to serve all stakeholders, and to play our role in creating more resilient and sustainable growth for the benefit of all.”
ESG: Hong Kong’s Focus on ESG Paves a Path to a Greener Future
As well as creating unprecedented challenges for governments and businesses, Covid-19 has also given the world a stark insight into the disruption that climate crisis will cause. This in turn has reinforced and accelerated the need for ESG factors to underpin investment and development strategies, and Hong Kong is leading the way in integrating those principles.
Driven by the urgency of climate change, the Hong Kong government has taken a proactive approach to ESG integration, establishing a strong policy framework and regulatory environment. In May 2020, five Hong Kong financial regulators and two government agencies established a steering group to push for sustainable finance policy and to coordinate on matters of environmental risk. HKEX is mandating disclosures on climate change and social issues for all listed companies from this year onward, bringing it in line with its competitors and making it more attractive to international investors. In November, the government pledged to make the territory carbon neutral by 2050.
Hong Kong companies, particularly those in the real estate and retail sectors, are aggressively pushing ESG integration to better meet the needs of both stakeholders and shareholders. Many of Hong Kong’s largest developers have long-established sustainability frameworks and most are committed to decarbonizing the city’s buildings by incorporating strict international green building standards such as LEED, WELL and BEAM, which are increasingly non-negotiable certifications required by corporate tenants.
Sino Land, one of the city’s leading property and real estate developers, last year became a signatory of the United Nations Global Compact, a scheme that commits companies to building sustainable communities. It plans to install 3,200 solar panels across 19 properties and three hotels to generate renewable energy. The company has also pledged to reduce the consumption of single-use plastics across its business by 50% by next year. In 2016, Swire Properties instituted its ambitious SD 2030 plan, a strategy to make it one of the world’s leading sustainable developers by 2030. Two years later, Swire launched the first certified green bond scheme in Hong Kong, with Hang Lung Properties and Landsea quickly following; the latter changed its name to Landsea Green Properties in 2019 to better reflect its commitment to sustainable development.
New World Development is another company that is raising the bar in this regard. As part of its ambitious Sustainability Vision 2030 plan, New World has set targets in four key pillars—Green, Wellness, Caring and Smart—through which it has pledged to achieve a variety of sustainability and social responsibility-driven targets, including halving its carbon emissions by 2030, ensuring all new building projects meet the LEED Gold and BEAM Plus certification standards, and supporting green startups through its Impact Kommons accelerator.
“Companies can no longer address stakeholder’s expectations without integrating ESG and demonstrating social responsibility in its business strategy and operations,” says Ellie Tang, Head of Sustainability at New World, adding ESG integration is key to the company’s long-term success.
“Companies can no longer address stakeholder’s expectations without integrating ESG.”
– Ellie Tang, Head of Sustainability, New World Development
ESG has also had an important role to play during Covid-19, as Tang explains. “In spite of the disruption caused by the pandemic on onsite construction works, we were able to respond quickly and maintain productivity and efficiency by deploying building information modelling (BIM) technology in project management. With the technology, certain construction plans and works were carried out in a virtual or contactless environment, which prevented colleagues and site workers from being exposed to health risks.”
A post-pandemic world provides a unique opportunity to reshape the global economy with ESG at its center, and through government action and proactive adoption by Hong Kong companies, the city is ahead of the curve as it rises to meet the challenges of the future.
Fintech: Hong Kong’s Fintech Industry Booms as Consumers Turn to Mobile Solutions
For most industries, the pandemic has brought a variety of setbacks and challenges, but for others—such as fintech—the need for remote access and increased dependency on mobile technology has accelerated growth. This has been particularly true in Hong Kong, where the fintech industry is dynamic and fast-growing, both in terms of innovation and fundraising, with 60% of funding in the city targeting new economy stocks in 2020.
Since announcing its support of the concept in 2017, the Hong Kong Monetary Authority has licensed eight virtual banks, all of which launched during 2020. Offering features such as near-instant account openings, 24/7 access and a full suite of financial services that can be performed remotely, virtual banks have found an receptive user base in Hong Kong at a time when most bricks-and-mortar banks have had to curtail their physical operations due to Covid-19 related restrictions.
“Hong Kong is a perfect landing pad for fintech companies eyeing opportunities in Asia.”
– Simon Loong, Founder and Group CEO, WeLab
Hong Kong’s only homegrown virtual bank, WeLab Bank, was among the first to launch. Founder and Group CEO of parent company WeLab, Simon Loong, says, “Hong Kong is a perfect landing pad for fintech companies eyeing opportunities in Asia. With its established and vibrant ecosystem, the city has enabled fintechs like WeLab to innovate and develop, and then expand to Greater China and beyond.”
Loong also believes that the fintech industry’s runway for growth is substantial. He points to customers’ evolving financial needs and mindset, and the benefits brought about by tech-enabled features that are changing people’s habits. “We’ve already seen customers taking advantage of the 24/7 fully remote access and user-centric experiences presented by virtual banks,” he says. “Virtual banks will become the norm in the next five years.”
The regtech pioneer iFinGate, which focuses on compliance and regulatory automation, is a Hong Kong-based company that recorded impressive growth in 2020, onboarding more than 500 financial institutions and licensed corporate clients. “Clients in Hong Kong have become more receptive to online services and regulatory compliance,” notes CEO William Lam.
Lam also highlights the support of Hong Kong Cyberport Management, the Hong Kong Trade Development Council and the University of Hong Kong as crucial to this success. He also points to the “well recognized legal system, and easy access to excellent talent resources in multidisciplines, which provide a strong backbone for Hong Kong to build and position as an important fintech hub.”
Airwallex—a digital global payment platform—is another company thriving in Hong Kong’s vibrant fintech scene. “From day one, we set out with a purpose to empower businesses of all sizes to grow beyond borders,” says Lucy Liu, Cofounder and President of Airwallex.
“We also see the incredible opportunities Hong Kong presents…in addition to its robust and transparent legal and regulatory framework.”
– Lucy Liu, Cofounder and President, Airwallex
Liu says the company was attracted by “Hong Kong’s status as an international financial center, which is key for our global expansion.” She adds, “We also see the incredible opportunities Hong Kong presents as the bridge of financial innovation between China and the rest of the world in addition to its robust and transparent legal and regulatory framework.”
During the pandemic, Airwallex’ s growth continued apace. “With more businesses now operating online, Airwallex has been at the center of this evolution,” Liu says. In the second half of 2020, Airwallex saw a 50% increase in its global customer base while its net revenue doubled.
Building on that momentum, the company plans to fill more than 300 open roles this year to support its global expansion, using Hong Kong as its base. “The fintech industry—in Hong Kong and the rest of the world—is primed for growth, as fintechs will play an integral part of economic recovery post-2020,” Liu says.
Biotech: Right Mix of Government Support, Finance and Talent Make Hong Kong a Major Biotech Hub
Faced with the greatest global healthcare crisis in a century, the biotech industry has flourished during the pandemic, as demand for Covid-19 test kits, antiviral drugs and vaccines has skyrocketed. Because of its unique advantages, Hong Kong is ideally placed to capitalize on the boom in this sector.
Hong Kong is a natural home for biotech, with five universities inside the top 100 of the QS 2021 World University Rankings, and the medical schools of the University of Hong Kong and the Chinese University of Hong Kong ranked among the 50 best globally in the same rankings. Building on that strong academic base is the Hong Kong Innovation & Technology Commission (HKITC) and the biomedical research cluster at Hong Kong Science & Technology Parks Corporation (HKSTP), which together have backed hundreds of ventures including successful local biotech startups such as Acaderma Asia and Sanwa BioTech.
“HKSTP has given us tremendous support during our early years.”
– Kelvin Chiu, CEO, Sanwa BioTech
“HKSTP has given us tremendous support during our early years as a small-scale startup and provided us with an international platform to accelerate our success,” says Kelvin Chiu, CEO of Sanwa BioTech, a diagnostics solution innovator with an advanced microfluidic-technologies platform in Asia. Chiu says HKSTP and HKITC provide startups with several funding schemes, such as the Innovation & Technology Fund, on top of offering world-class facilities at existing sites and investing in new locations such as the Advanced Manufacturing Centre (AMC) in Tseung Kwan O Industrial Estate, which is slated to open in 2022. Sanwa BioTech will base its new manufacturing facility at AMC, and Chiu believes the move will help the company scale by expanding its manufacturing capacity to enable it to supply its diagnostic products to Asia and other markets around the world.
This dynamic support structure and generous funding environment has attracted a slew of international businesses, including ACT Genomics, an integrated biomarker solution leader in Asia for precision cancer management with operations in Taiwan, Japan, Singapore and now Hong Kong. In 2019, ACT Genomics decided to open a facility in Hong Kong due to HKITC and HKSTP “actively promoting the biotech industry,” says the company’s Chief Financial Officer Victor Chan. “When we started considering establishing a world-standard [next-generation sequencing] lab in Hong Kong, we got strong support from HKSTP in terms of site preparation, infrastructure and facilities,” Chan adds.
Chan says Hong Kong’s location, on the doorstep of mainland China and as an integral part of the Greater Bay Area economic zone, is another reason that biotech companies are flocking to the territory, not only for the potentially huge market, but also the chance for regional collaboration fostered by the city’s innovation agencies. “HKITC and HKSTP have provided a very attractive environment, both physically and intellectually, for partners to interact for further scientific and innovation advancements,” he says.
Outside of government support, Hong Kong’s world-class financial infrastructure is also proving a boon to biotech. With the focus on R&D, biotech startups rarely generate meaningful revenue, let alone profit, and this can prove an obstacle in raising capital. But a recent rule change by HKEX has made the city a mecca for biotech listings.
In 2018, HKEX allowed qualified biotech businesses to list on the exchange before earning revenue, and the resultant change has seen dozens of companies go public, including Innovent Biologics, CanSino Biologics and Alphamab Oncology. With billions of dollars raised and more companies looking to list, Hong Kong has, in less than three years, become the second-largest biotech fundraising center in the world after the U.S.
Art & Culture: Hong Kong’s Cultural Events Show Resilience as well as Innovation to Adapt
Hong Kong’s arts ecosystem has grown rapidly in size and sophistication over the past decade, with events such as Art Basel raising the city’s global profile while catalyzing the expansion of the broader cultural landscape. Although the pandemic forced the cancelation of many in-person events, Hong Kong has demonstrated resilience and innovativeness to find alternatives that turn adversity into opportunity.
Art Basel, for example, hosted its Online Viewing Rooms in March in an effort to provide an alternative platform to showcase art works that galleries were planning to bring to the physical fair. Adeline Ooi, Director Asia, Art Basel, says this allowed galleries to engage remotely with Art Basel’s global network of patrons and promote their artists to new collectors and buyers.
“We believe that digital platforms cannot replace the experience of seeing art in person or visiting the fair itself,” says Ooi. “However, digital tools and platforms such as Online Viewing Rooms have helped galleries build momentum among collectors and to stay connected at a time when it has not been possible to travel and meet.”
“The pandemic has hastened the digital evolution in the industry, with a new approach to client engagement.”
– Francis Belin, President, Christie’s Asia Pacific
The auction sector has taken many of its events online in the past year. Christie’s held a hybrid in-person and online New York-Hong Kong auction in December that was watched remotely by 500,000 people. Meanwhile, the auction house’s online-only sales rose more than 260% last year to a record US$311 million. Digital tools such as Augmented Reality, audio tours and virtual viewing rooms were employed to enhance the online auction experience.
“The pandemic has hastened the digital evolution in the industry, with a new approach to client engagement, marketing, sale formats and remote selling tools,” says Francis Belin, President of Christie’s Asia-Pacific. “Collectors will increasingly transact across multiple channels, not just live auctions, and auctions can be hosted more nimbly, tapping the level of demand and shifts in tastes throughout the year.”
S. Alice Mong, Executive Director of Asia Society Hong Kong Center (ASHK), has been active in supporting the city’s art ecosystem during the pandemic through ART Power HK, a campaign that brings together more than 150 partners from across the local arts community. Launched in February 2020, ART Power HK provides an online platform where stakeholders can share art offerings through virtual exhibitions, tours, talks and videos.
In addition to being Covid-safe, ART Power HK’s virtual nature has the added benefit of giving its content a much larger—and truly global—reach. Since going digital in 2020, says Mong, ASHK has been able to connect to a global audience of 500,000, compared with an audience of 15,000 the year before. “It made art very accessible,” she says, adding, “I think these virtual and online shows and events are here to stay, to enhance our experience of the arts, and serve as a wonderful accompaniment to the in-person arts and culture offerings.”
While some organizations have adapted their operations to continue during the pandemic, others have found new opportunities amid the “new normal.” Hong Kong’s first purpose-built Covid-responsible entertainment offering, The Grounds at AIA Vitality Park, is one such example. Hosting movie screenings, live music, family activities and wellness classes that guests can enjoy from the safety of their own private pod, The Grounds serves as a blueprint for socially distanced events.
Simon Wilson, Managing Director and Cofounder of The Grounds, explains they had to completely reimagine the event experience from a Covid-responsible perspective, which includes temperature checks, mandatory hand sanitization and contactless food and beverage ordering, in addition to the socially distanced design.
Wilson says the response from guests has been overwhelmingly positive, with most events selling out, and he believes the format’s popularity will continue even after the pandemic has passed. “Guests are starting to see these sorts of event features as a premium plus point,” he says. “The pandemic has shifted consumer habits, and I think people will prefer an intimate experience to mass gatherings for some time to come.”
In the 2020 Globalization and World Cities Research Network report, which ranks global cities in terms of their advanced producer services, Chengdu jumped to the highly regarded Beta+ level, coming in 59th worldwide. Chengdu, also known as Rong, is the capital city of Sichuan Province. Besides being a major center of finance, science and technology in Western China, an international gateway and a world-famous cultural city, it is also one of China’s most innovative hubs. In 2020, its regional GDP stood at 1.8 trillion yuan (US$274.7 billion), up 4% year on year.
The trailblazing spirit of Chengdu dates back more than 2,000 years—it has a rich heritage of vision and the courage to persevere. From the city’s Dujiangyan irrigation system, the first-ever to achieve flood control without the use of dams, to its world-first adoption of woodblock printing and paper money, to its involvement in China’s first 5G network, groundbreaking ideas and inventions have flourished in this vibrant city.
Chengdu has an international outlook and is seeking a more active presence in the global economy. As one of the nation’s first innovative pilot cities and innovation demonstration zones, Chengdu shoulders the strategic mission of fostering China’s high-tech ambitions, and aims to become a global innovation hub.
As the first Chinese city to put forth a systematic proposal to develop a new economy, Chengdu has taken the lead in implementing measures to support the nation’s pursuit of high-quality growth. In 2017, Chengdu identified six new areas of focus: the digital economy, the intelligent economy, the green economy, the creative economy, the web traffic economy and the sharing economy. Its goal is to have a globally competitive and regionally significant new economy by 2022, with its output value exceeding 500 billion yuan (US$77.5 billion) and economic aggregates ranking among the top performers nationwide.
As a strategic focal point for the city’s new economy initiatives, Chengdu Hi-Tech Industrial Development Zone (CDHT) is spearheading the development of cutting-edge technologies, such as 5G communications, AI, big data, netcasting and animation production, attracting Alibaba, Baidu, Kuaishou, iQiyi and other industry giants to settle in the area. CDHT is home to more than 180 firms focused on 5G or AI, who generated a total of 11.2 billion yuan (US$1.7 billion) in revenue in the first half of 2020. In the netcasting and animation production industries, CDHT supports over 600 companies. Over the same period, their combined revenue totaled 22.1 billion yuan (US$3.4 billion).
Chengdu-Chongqing Twin City Economic Circle, the coordinated regional development of the two cities, was proposed amid major shifts in the global landscape. Amid these significant and complex changes, the Chengdu-Chongqing area has become “the fourth pole of China’s economic growth” after the Yangtze River Delta, the Pearl River Delta and the Beijing-Tianjin-Hebei region. It is expected to support the high-quality development of advanced technology across the country, with the twin aims of tackling unbalanced growth and boosting China’s dual circulation strategy—shifting the focus to domestic consumer spending and placing less reliance on exports.
What’s more, Chengdu is the first city in China to fully embrace new urban planning concepts with its vision of becoming a “park city.” From the initial concept to building a park city demonstration zone with green and sustainable practices in mind, Chengdu is actively promoting ecological values in a high-quality urban development. Under the framework of the Chengdu-Chongqing Economic Circle, the park city demonstration zone is key to Chengdu’s efforts to attract people and industries and become a world-class city.
Among its accolades, Chengdu has appeared on several Forbes China lists, including Best Cities For Business, Top 30 Most Innovative Chinese Cities and Best Cities for Living. Top young entrepreneurs from Chengdu were also among the 2020 Forbes China 30 Under 30.
2020 Forbes China 50 Most Innovative Companies
Chocolate Cartoon, Chengdu
Chocolate Cartoon’s Ne Zha, an animated film jointly presented by Coloroom Pictures and October Media, broke more than 30 industry records in China. It took in over 5 billion yuan (US$775.5 million) at the box office, making it the country’s highest grossing animated film and the second-highest grossing film ever.
2020 Forbes China Up-and-Comers
ALD Aviation Manufacturing
Sichuan Haite High-Tech
2020 Forbes China 30 Under 30
Li Ruihao, CEO Sichuan Weishu Lifang Education
Luo Yuyang, Cofounder Sichuan Weishu Lifang Education
Richard Chen, Cofounder Mint Consultancy
Zeng Xi, Founder LadyMyron
Sun Qiangqiang, Associate Professor/Ph. D Supervisor Southwest Jiaotong University
Tong Xin, Ph. D. Supervisor University of Electronic Science and Technology of China
The 2020 Forbes China Innovation Summit, held in Chengdu Oct. 29-30 under the theme “New Breakthroughs in Global Innovation,” was hailed as a success. Jointly organized by Forbes China and the Chengdu Municipal Government for the past three years, the event aims to highlight innovative achievements and breakthroughs, and share visions and insights about how urban innovation drives the modern development of cities and their surrounding regional economy.
According to Forbes World’s Billionaires list 2020, six out of the world’s top 10 richest cities are in Asia, and Hong Kong is ranked No. 2. As many of the city’s billionaires accumulated the majority of their wealth in a single lifetime, one of their priorities is to preserve it for future generations. Setting up a family office comes into the picture for wealth succession planning.
Over the past year, Hong Kong has continued to develop its edge in wealth management. In September, Hong Kong’s Securities and Futures Commission issued the first licensing guidelines for the family offices industry. Two months earlier, the government passed a law allowing fund managers to set up limited partnership funds in the city, a business format favored by family offices.
The DNA of Family Offices: Resilience and Versatility
“The development of family offices is very much in line with Hong Kong’s DNA as a comprehensive international financial center. One thing to highlight is the importance of family offices being endurable because families are built to last. On that front, Hong Kong has exhibited similar qualities as being highly resilient and versatile,” says Christopher Hui, Secretary for Financial Services and the Treasury.
As a sophisticated financial hub, Hong Kong has a robust legal system, a low and simple tax structure, and it is one of the world’s freest economies. Its strategic location in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) connects the city seamlessly with this robust growth engine and the rest of the world.
Nearly 80 of the world’s 100 largest banks and 70 of the top 100 global money managers have a presence in Hong Kong. It is a global offshore renminbi business hub and a major platform for international investors to allocate renminbi assets. The city is also the largest international asset management hub in Asia and it is the second-largest private equity center after mainland China. There are more than 500 private equity and venture capital firms based in Hong Kong, including 15 of the top 20 global PE managers. It is among the world’s largest equity fundraising centers and Asia’s third-largest bond center, excluding Japan. It offers an ideal platform for investment exit.
As a unique and dominant gateway between mainland China and the rest of the world, the city accounts for the largest inbound and outbound direct investment of mainland China. The Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect and Mutual Recognition of Funds all facilitate cross-border investment flow.
As one of the world’s largest green bond markets with US$10 billion arranged and issued in 2019, Hong Kong is cementing its position as a green finance hub in Asia-Pacific.
InvestHK’s Global Family Office Team
To encourage family offices from around the world to set up a presence in Hong Kong, InvestHK has set up a dedicated team. The Global Family Office Team is a strategic initiative supported by the Financial Services and Treasury Bureau and works in conjunction with regulators and industry stakeholders.
The family office specialists, who are located in Hong Kong and in key cities around the world, working alongside InvestHK’s network of 32 global offices, will offer bespoke support and tailor-made solutions. These include identifying opportunities, providing support during set-up and helping newly established family offices to become part of Hong Kong’s vibrant financial ecosystem.
In the past year, InvestHK supported wealth-services managers such as Pacific Hawk, Raffles Family Office, Hywin Wealth and AvantFaire Investment Management to set up or expand in the city.
South Korea’s decisive, science-led response to the coronavirus pandemic offers insight into another successful partnership. Seoul is working with Korean entrepreneurs and their fledging companies to develop one of the world’s most promising startup ecosystems in line with the nation’s growth as a global economic center.
Across the South Korean capital, startups are harnessing government investment and services to make significant advances in industries engaged in the most crucial challenges of our time, notably finance, biomedical, manufacturing and social enterprise. Seoul is providing intensive support to 300 companies to prepare for global demand for banking and health services in the wake of the Covid-19 pandemic.
The city’s startup ecosystem already has a value of US$39 billion, according to the research firm Startup Genome’s Global Startup Ecosystem Report 2020. Driving that success has been the emergence of 13 Korean unicorns—privately held companies valued at US$1 billion or more. The near future promises more game-changing developments by a bevy of new Korean companies.
Kim Eui-Seung, Deputy Mayor for Economic Policy at Seoul Metropolitan Government (SMG), said at a news conference in Seoul in June, “Startups are drawing more attention amid global challenges such as the Covid-19 outbreak, and are becoming increasingly more influential in a technology- and innovation-dependent global economy.
He added, “The city of Seoul will focus on the scale-up of promising startups amid a prolonged pandemic, as we have steadily invested over the past few years to foster future industries such as AI, fintech and biomedicine.”
To support innovation in the financial services sector, Seoul Fintech Lab offers accelerate programs, mentorship and investment to fintech startups in Seoul. “We want to be a driving force to change the fundamentals of the existing financial industry and ultimately serve as an edge for international competition,” says Im Gug-hyun, Team Leader of the Financial Industry Team at SMG.
At the lab’s gleaming offices in Yeouido, Seoul’s financial district in the heart of the city, companies are provided workspaces as well as common areas to network and hold meetings to promote idea sharing and support. “There are many stages of business development, and Seoul city would like to encourage growth to generate synergy,” Im says.
Down one hallway sits Tanker Fund, an AI platform that provides real-time information on real estate. Its technology also can help determine terms of a property transaction, such as the optimal amount of a loan. Tanker Fund CEO Lim Hyun-seo says, “The centralization of data collection and sorting on a daily basis is challenging. Our competitive advantage is in the accuracy of our platform’s sorting and processing of data.”
Along with the office space offered by Seoul Fintech Lab to get his startup off the ground, Lim says, Tanker Fund has benefited from the ability to network with other startups while having a foothold in South Korea’s financial epicenter. “Being in a lab gives us access to the companies that can most benefit from our services,” he says, and its Yeouido address gives the firm additional clout.
Along with modernizing key industries such as finance, Seoul startups are also working on today’s most pressing health issues. Seoul BioHub, located at a nexus of ten universities and six hospitals in the north of the city, provides a space for companies to operate in an ecosystem while seeking to deliver valued-added health services in South Korea and beyond.
The sprawling green campus, which opened in 2017, features separate buildings for laboratories, education and events, as well as offices. From 2018 to 2022, the government will build a Seoul Bio Fund valued at 300 billion won (US$262.3 million) and allocate 24 billion won (US$21 million) for a R&D fund. It also will ease some government regulations to facilitate research. Sixty-six companies now operate in the hub, drawn from the medical device, pharma and digital healthcare sectors. The pandemic has made the hub’s activities particularly timely and relevant.
“Our key role is to recognize potential. This year, Covid provides opportunities for overseas expansion,” says Kim Ji-seung, a researcher at Seoul BioHub.
In one brightly lit office is Palogen, a startup that leveraged semiconductor technology to build the diagnostics industry’s first “Genomic Biosensor,” which provides fast, accurate testing for diseases including early-stage cancers and Covid-19. “Our goal is to harness the speed and efficiency of semiconductors to provide real-time testing,” says Palogen CEO Han Kyung Joon. “The workspace and support from Seoul BioHub have made it possible for us to pursue that.”
The fledgling ecosystem of the campus is also an attractive destination for global investors. U.S. healthcare giant Johnson & Johnson’s pharmaceutical division operates an office at Seoul BioHub, recognizing the opportunity for growth and development. “We came here to form a network, to get expertise and ideas. We need innovation to meet challenges in the bioscience field, and we want to help mature all of these ideas,” says Lee Joon-youp, Manager, Janssen Korea. “We’re all striving to meet challenges that are more important than at any other time.”
Seoul’s startups are using a diverse range of ideas, locations and technologies to find solutions. Throughout a maze of alleys in northeastern Seoul, disused university properties and converted shipping containers now serve as office space for startups, and a former underground parking lot is a hub for cutting-edge 3D printing technology.
The initiative was launched by Campus Town Startup at Korea University—a broad effort to merge technology innovation with the revitalization of the local community through collaboration between the government, the university, entrepreneurs and local residents.
With a 10 billion won (US$8.7 million) investment from the Seoul government, the project provides office space and equipment, including desks, printers and Wi-Fi, to fledgling companies along with facilities for the community, such as library space and public work stations. Campus Town organizers also hold local events and forums for dialogue between students and residents. “We focus on more than supporting startups. We also find ways to link them with the local community and make those connections sustainable,” says Kong Jung-sik, a Professor at Korea University’s School of Civil, Environmental and Architectural Engineering. “Creating a good living environment is our ultimate goal.”
One of the most promising startups to come out of Campus Town is AEOL Korea, which makes next-generation, energy-efficient heating and cooling ventilation systems. The company is in talks to supply its products to two large public companies in South Korea, and plans to continue developing energy-saving materials that can be applied across industries. Baek Jae-hyun, CEO of AEOL Korea, says, “Our technology can change the world and be part of a more sustainable future.”
In Seoul’s Seongsu area, in the east of the city, old challenges and new solutions come together. The neighborhood was once a buzzing ecosystem of auto repair shops and publishing houses. Lee Tae-hoon, Head of the Startup Division of the Seoul Business Agency, saw the now-struggling industrial area as the perfect location for Seoul Startup Hub Seongsu, which is focused on fostering social impact ventures.
Established in 1998, the Seoul Business Agency added the startup division in 2009, selecting 1,000 entrepreneurs for comprehensive early-stage support. The group has prioritized not just the firms’ rate of return but also the development of a startup culture in Korea and inspiring young entrepreneurs. Another aim is to establish a space for shared economies to address social issues.
Its annual 5 billion won (US$4.4 million) investment in the program is paying off with participating startups posting an average annualized rate of return of 160%. “Our goal was to create a culture where socially minded startups could pursue their vision without having to worry about money, and then provide direct investment when they advance to company form,” Lee says.
Ted Kwon, CEO of Coolidge Corner Investment, a Seoul-based venture capital fund, says Seoul Startup Hub Seongsu is a constant source of the kind of startups to which he is most drawn. “Before, questions of investment only focused on the financial aspects. Nowadays consumers, especially young people, are more interested in who made the product and why,” Kwon says. “The first question we ask is, ‘Did the founder start this company to solve a particular problem?’”
One particularly exciting startup to emerge from Seongsu that has enormous potential for social impact is The Wave Talk, whose core product measures the quality of drinking water with easy-to-use, inexpensive laser technology.
The Wave Talk CEO Kim Youngdug says he was motivated to find a solution since it can be difficult to tell the difference between safe and unsafe water with the naked eye. The Wave Talk has raised more than US$10 million in funding and plans to launch portable sensors that can be installed in homes around the world to potentially prevent millions of people from drinking tainted tap water and save lives.
“The technology measures bacteria, plastic, heavy metal and viral impurities and gives a numerical reading,” Kim says. “It currently takes 10 seconds, and we will get that down to five.”
For companies looking to expand their business into Asia, Hong Kong has long made sense as a good first step. With a common law framework and well-developed infrastructure, Hong Kong offers fertile ground as firms pursue reach across the region.
Its accessibility—the Special Administrative Region is within a five-hour flight for half of the world’s population—is unparalleled. A number of international businesses base their regional operations out of Hong Kong, providing abundant opportunities for networking and connectivity. And its top-class convention and exhibition spaces are some of the most attractive and well-run in the region. No wonder Hong Kong has for decades been recognized as Asia’s leading destination for meetings, exhibitions, conferences and events, an industry commonly known as MICE.
As Hong Kong’s reputation as the region’s go-to destination for MICE events soared, the range of exceptional venues to hold them has morphed. The Hong Kong Convention and Exhibition Centre (HKCEC) remains the choice venue for international events and consistently wins “Asia’s Best” awards—despite intensifying competition in the region—for its service excellence, professionalism and experience in hosting world-class events. The HKCEC is now home to three of the world’s largest, and five of Asia’s biggest, trade exhibitions. World-class fairs such as Art Basel Hong Kong, Vinexpo Hong Kong and Cosmoprof Asia populate HKCEC’s packed calendar.
Having scooped more than 50 major awards in the space of 14 years, Asia- World-Expo has emerged as a leading exhibition and convention venue in Asia, hosting a high-profile and diverse roster, including the Global Sources Trade Fair, the Hong Kong Masters equestrian event, Asia Pacific Life Insurance Congress 2019 and Hong Kong Fintech Week 2019.
The Hong Kong International Trade and Exhibition Centre in Kowloon Bay brings a third impressive option to this vibrant mix, as well as six-star hotels with their own cutting-edge conferencing facilities. Add to this the work of a dedicated event-planning partner, Meetings and Exhibitions Hong Kong of the Hong Kong Tourism Board. Members work tirelessly to aid organizers in designing smooth-running events, from being a super-connector with local trade partners to assisting with hotel bookings and bid proposals, to coordinating hospitality and trade offers, to even arranging dedicated immigration counters at Hong Kong International Airport for mega MICE events. Their experience ensures highly tailored meetings and events move flawlessly from vision to reality.
The 2019 Index of Economic Freedom has ranked Hong Kong the world’s freest economy for the 25th consecutive year. In 2018, Hong Kong was awarded “World’s Leading Business Travel Destination” and “Asia’s Leading Meetings and Conference Destination,” at the World Travel Awards, and “Best City for Meetings in Asia” by Smart Travel Asia. The numbers illustrate Hong Kong’s attraction as a premier MICE destination. In total, 2.3 million visitors participated in “trade” and “trade and consumer” exhibitions in 2018, and more than 69,000 exhibiting companies came to Hong Kong to strengthen their business opportunities.
Hong Kong’s global free port continues to thrive on the free flow of goods, services and capital, and the city remains a rock-solid destination for those wishing to host outstanding exhibitions and events.
With its stable political environment, robust regulatory framework and a sophisticated portfolio of entity structures, the Republic of Seychelles in the Indian Ocean is an established international financial jurisdiction that offers businesses and investors a range of products to meet their increasingly complex needs. Today, a host of global financial institutions, law firms and corporate service providers have set up operations on the archipelago, attracted by the country’s many tax and business benefits.
“Seychelles as a jurisdiction has a very solid regulatory framework that is a hybrid of English common law and French civil law. Having a legal system with such flexibility enables us to provide innovative structures to meet the needs of companies,” says Dr. Steve Fanny, Chief Executive Officer of Financial Services Authority, the regulatory body for non-bank financial services in Seychelles.
Fanny adds that Seychelles also enjoys low crime and unemployment, and a literacy rate of more than 95%. “In a nutshell, we have in place the necessary infrastructure for good economic development and growth. That is what differentiates the Seychelles from other jurisdictions,” he says.
Gateway to Africa
Made up of 115 islands that lie 1,500 kilometers east of mainland Africa in the Indian Ocean, Seychelles is ideally positioned as a gateway for international investors into the fast-growing economies of the African continent. In particular, there has been growing interest from Chinese investors in recent years to use the Seychelles as a jurisdiction to expand into Africa.
Seychelles has had a long relationship with China; the two countries established diplomatic relations in 1976. “Our relationship with China has grown over the years and the two countries have one of the best double taxation agreements. Seychelles is also supporting China with the Belt and Road initiative,” says Fanny.
Seychelles provides companies and investors with a wide range of entity structures to meet their various needs. For instance, the International Business Company (IBC) is a simple and flexible structure that is ideal for any business, from personal services companies to collective investment schemes operating locally or internationally. Another structure, the Company (Special Licence), or CSL, is a Seychelles domestic company that is allowed to conduct business both internationally and within Seychelles. Both IBCs and CSLs are not subject to Seychelles’ tax or duty on income or profits if they do not derive assessable income in the country.
For investors looking for asset protection, Seychelles offers trust and foundation structures that appoint a trustee/council to manage assets on behalf of the beneficiaries. There are also a host of fund structures that create pools of funds for specific investments.
In the face of a fast-evolving global landscape, Seychelles is designing new products to meet the changing needs of businesses around the world. The jurisdiction will soon publish a set of regulations for a regulatory sandbox to accommodate the increasingly important financial technology (fintech) sector. The sandbox will provide a regulated environment that will allow fintech companies in the capital market space to carry out live testing of their innovative products or services. There has been marked interest from several large fintech companies to participate in this initiative. Says Fanny,“Fintech is a fast-growing industry and we are seeing many players coming to Seychelles.”