The latest survey by US magazine Inc showing Hong Kong is falling way behind Shenzhen in the ranking of emerging start-up hub came as stark reminder that this once renowned capitalist enclave has lost much of its luster.

More troublesome, business leaders and economists said, was that major government initiatives to promote and nurture start-ups, especially in the technology industry, have been frustrated by irrational and unnecessary resistance from lawmakers of the opposition camp.

For example, the request by the government for initial funding to establish a new Innovation and Technology Bureau was withdrawn because of filibuster by a small group of radical legislators.

It is widely known among industry experts that Hong Kong is losing the race to attract start-up companies because escalating land cost has undermined the city'€™s competitiveness as a hardware manufacturing base. As a result, Hong Kong is losing out to Shenzhen as a start-up hub despite its advantages, including a sound legal system and unmatched convenience in starting a new business.

Shenzhen ranked fifth in the Inc survey of emerging start-up hubs around the world while Hong Kong was nowhere to be found in the list.

Zheng Yanfeng, associate director of Centre for Asian Entrepreneurship and Business Values at the University of Hong Kong, said that the primary advantage of a city to attract start-up companies is the harmonious cooperation of technology hardware configuration, technology talents and venture capital.

But Hong Kong, he said, is lacking in '€œtechnology hardware configuration and technology talents,'€ two of the essential elements for successful start-ups.

Zheng said many start-up enterprises preferred to set up in Shenzhen, at least in the initial stage, largely because there are no shortage of supporting industries necessary for sourcing materials and components.

Where Hong Kong can compete, industry sources said, is in the area of software design and development, owning, at least partly, to a better environment for the protection of intellectual property rights.

Zheng noted many foreign technology companies have picked Hong Kong for establishing their design and management operations while basing their manufacturing and sales operations elsewhere. (***)

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