Hong Kong is one of the busiest ports in the world. The city’s strategic location as the gateway to China, has always been appealing to those in the manufacturing, supply chain and shipping businesses. Tech startups in the logistics sector are beginning to notice this and setting up shop. Logistics and startups are not often thought of in the same sentence. The movement, tracking and delivery of goods have long been the stronghold of large industrial players. But with cloud technology, entrepreneurs who see the potential for improving efficiency, creating better visibility and providing better service, are competing head on. As their businesses grow, they are choosing Hong Kong as a strategic location for expansion. Hong Kong’s Strategic Location For Ryan Petersen, CEO of Flexport, an online freight forwarding and customs brokerage service, Hong Kong was an obvious choice. “We move so much air freight out of southern China through Hong Kong airport, the largest cargo airport in the world, that it was a no-brainer for us to set up operations there.” Hong Kong’s strong logistics sector is often underplayed as glitzy bank skyscrapers dominate the skyline. However, trading and logistics is the largest industry in Hong Kong, making up almost a quarter of its GDP. According to Francesco Grillo, CEO of Steel Available, a sourcing startup that works in the heavy industrial sector “Hong Kong was a natural next destination. It provided a great base for me to maintain my existing Chinese business network and begin expanding to South East Asia. Hong Kong has a skilled labor workforce and a highly efficient business environment.” For Trusu, CEO and co-founder, Osman Mendoza, “Hong Kong was highly strategic. Offering a high concentration of businesses in a relatively concentrated area, it allows us to scale with ease. From a geographical perspective, its proximity to Guangdong Province and the rest of China is also a huge benefit for sourcing and on-boarding users.” Both Trusu and Steel Available are currently in the blueprint accelerator program run by Swire Properties. Challenges Faced by Startups The city is certainly a smart choice for these startups, but expansion to any city can be challenging. Building out a new office and hiring staff in a new country can be a make or break moment which leads to further growth or turmoil. Even large companies can make overconfident assumptions about their ability to enter new markets. But for smaller players, the stakes are even higher, as new market entry can quickly burn through capital, leaving very little cushion if plans are not thought through or executed properly.
Written by: Ignacio Gassó