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Oscar Salet

How to grow your SME business in Hong Kong

BY OSCAR SALET

Hong Kong is an extremely competitive business environment in which developments come and go in a fast pace.

In addition to its rather substantial autonomous market, it’s like a funnel through which a lot of China’s cream of corporates push their international activities and in return numerous foreign companies seek a way into Asia or specifically China.

This environment is a tough one for SMEs to stand out, not in the last place because Hong Kong currently is a place with only several flourishing sectors where size matters: banking, corporate services, food, retail and logistics.

Many SMEs struggle to make a difference in this environment and are stuck in this market of 7.5 million people, with a hinterland of 1.3 billion people looming across the border.

How can you get your hi-tech company to a higher level, what can you do to get your product & portfolio development up to an attractive level  and who can you turn to in order to scale up this great idea that doesn’t stand out if it’s only developed in a C-grade shopping centre in Sheung Wan?

What are the options in these times when IPOs hardly generate the liquidity you could count on without doubt in better times, until very recently?

Traditional ways of business development are either autonomous growth or expansion through acquisition (buying or being bought). Both ways require a substantial investment.

Autonomous growth takes time, money, investments in staff and perhaps equipment, new locations of business or, if you go online, a slick responsive website with tailor made features that always will cost you more than the price at which it is advertised by the web developer.

Acquisitions require big capital too; you either need to arrange capital to make the desired acquisition, or you need to hand over some of your autonomy and part of your shares in order to have a strategic investor buy into your business.

A comparatively younger type of business development strategy is through strategic partnerships. They can provide the necessary channels and resources to realise the next development you had in mind for your business, while preventing you from having to spend a lot on it. Before you start to find a strategic partner, it is essential to consider a few important points:

1.       What is my general strategic plan, and in what direction do I want to develop?

2.       Do I have a unique value proposition with a product or service that is hard to copy?

3.       Do I have enough resources to carry out the development in-house?

4.       If not, what should a partner bring in so we can have a success formula?

5.       Do we need a local or foreign/international partner to reach the set goals?

6.       What can we offer the partner, so the partnership is attractive to both of us?

7.       In the setup we choose, how do I want to share the revenue with my partner?

Once you have structured your goals around your core business and know the way forward, you can determine what you want a partner to bring in and you can proceed to finding that ideal partner in a structured and efficient way.

In Pharma and other hi-tech sectors, partnering is already the norm for innovation and disruptive propositions. Give it a thought; the sector you are active in can be equally suitable.

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Hongkong Business. The author was not remunerated for this article.

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Oscar Salet

Oscar Salet

Oscar Salet is a Dutch entrepreneur and director of Alliance experts Hong Kong, the first boutique Strategic Partnership Consultancy in Hong Kong. His role is to advise companies on strategic issues involving business development and internationalisation. He previously worked as a general manager at a buying and sourcing office, Dutch trade commissioner in Central-West China and tech start-up consultant in Europe. He holds a Master of Arts degree in Chinese Studies from Leiden University and speaks Mandarin fluently.

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