Thank you Im Yu for coming to talk to us. Thanks for the invitation. I know you have been helping a lot of entrepreneurs in China with mentoring and so on. Could you tell us a little bit about, you know overall, what do you think of entrepreneurship in China? You know Chinese from day one, the ancient China, you know they are good in doing business. So it is since the reform of China, the original Chinese entrepreneurship, the ingredient are all ready and then it just waits for the opportunity. And once there's a opportunity, all the Chinese are ready for gain their money or not gain the money. It's to get the opportunity to get more prospects. So this is naturally. All Chinese are entrepreneurs. Do you think the timing is now, that this is a good time to be entrepreneur in China? It's always, but of course because of the reform, there is opportunity for foreigners to participate into the economy. What are the challenges that you see? I mean you have a lot of entrepreneurs, what are the challenges they face? I mean, both from the local entrepreneur, as well as, foreigners coming to China. The challenges... for sure is the cultural difference. You know we accept the game, the rules of the game a lot, because we used to that. But in the coming, this time, the rules were there, and then they opened it up... once the control lost, they lifted it, and it seems that they are trying their best to get the opportunity. So they are not that... in the mind set that the rules should not be totally accept. So the gap is there. So we are, we are seeing there are some rules, but then, people not yet kind of understand or not everything's been written yet, in terms of...? Well actually, there are too many rules in China to be accept. So, if you follow all the rules, at the end of the day, you can't innovate at all. So you have to follow that rule, but doesn't mean you have to play the old game. So, in order to be innovative, then you have to break that rules. There are too many rules. At the end of the day, they used to that. So when there's a very critical rule, in our mind that you know we have to accept, but in China, they just tend to ignore that. So when you are doing your business in China, either you follow your own culture to observe all the rules, and at the end of the day you lose in the competition... or you do not, you try not to follow that rule, but your mind or your investor doesn't like it. So that would be a big challenge for foreigners, right, because how would they know the rules in the first place, because there's cultural differences. This is not written... it's not in written format. Even when you consult your consultant in China, they cannot tell you, you know, everything on paper. So how would you advise a foreigner, how can they get to know a bit more about this? The easiest thing you know is to get a Chinese partner. So, if that Chinese partner understand your concern or you are good partner, or somehow you find a good... a bad partner, too bad. But this is an opportunity for the two, to know each other, or maybe there are a lot of Chinese students, they study abroad, so they are going back to their homeland, so you partner with them, then you have the advantage. So a partner, a partner who know the local market becomes very important in doing business in China? Yes, or on the other hand, Hong Kong is a very special place. Since day one, when the British try to do business with China, they open up the opportunity by getting the colony in Hong Kong to do... that's the only port at that time. The old China can do business with the Western world. Then Hong Kong is such a place, it's a market place. So in the old days we have trading on opium, it's a kind of trading, also, ok? Long time ago, ancient China time. So then, we have silk also, so Hong Kong is the place, that people do trading, in terms of textile, in terms of even traditional banking. But startups is a new kind of trading. So we have to use Hong Kong, as a new market for the Western world, to do business with China or do entrepreneurship. A platform, make that, build a platform. I can, would rather, i would recommend foreigners, if they are interested in to do a startup in China, consider Hong Kong as the gateway. It's a stepping stone to China? And maybe it's not quite common for Western companies, to use... Western startups to use Hong Kong in the past, because startups in Hong Kong are not as hot. People doesn't understand startup much, only say a few years back, and they recognize it, only in the last couple of years. If you count the number of co-working space in Hong Kong you know that is booming. So, it's the right moment for foreigners if they are interested in do their startup in China, consider Hong Kong. Right. What other challenges do you see? You've seen a lot of entrepreneurs, right, so apart from knowing the rules and regulations, knowing when to follow some of the things, what other challenges, or not just challenges, but also what are the advantages, as well as challenges in starting a company in China? Continuing on the challenges, languages is a problem. It's a cultural difference, not only the mindset but you know say if as a foreigner, they don't understand Chinese, there will be definitely a deficit or a big limitation because a lot of regulations, a lot of the latest news are all in the form of Chinese. In China these days, they are a lot of information on digitized, and if you are not familiar with their culture, they are not familiar with the system, you cannot get the first hand information. And also, a lot of startups, they are driven by the monetary, I mean, the municipal body, like the city, like the provinces. You know they have the fund, ok, in order to keep the talent within their country or their city, so foreigners are not used to that game. So at the end of the day, your competitor, they know how to get the funding, and they always went faster than you, because you are using the old rule or the foreign rule to do. So it sounds like, first of all, knowing where the source of information and also the source of fundings and how to get the funding from different cities and provinces? Yes, you have to know where to pick the right city, for example, and their policy, and they change a lot because itself, you know, governments or the bodies in the government, they are itself a startup like, because everything are so new. So they have to find the right position to fund. So they tested it and if failed, then we find it and do it again. So to us, we are not used to it, because we believe that the rule would not change so rapidly. There are so many cases, the rules can be changed only in days. Right. So you consulted it, you ask somebody for it and only a few days, it is already lifted that rule. So even the government or even the regulators, they are also learning every day and things are changing so rapidly, still? Exactly, exactly, so that's the challenges. But maybe the opportunity, too. It could be opportunity. Exactly. And have you been helping, like, entrepreneurs to find investors, as well? Yeah, I just started. Because I was a banker, I used the traditional way like IPO, M&A, or private equity, but lately I've found that it will be, to me, more interesting to help the startup out, particularly the Hong Kong startup to get the opportunity into China. And what I found that, is that the investors in China, they are more open than the local investor in Hong Kong. In what way, would you say they are more open? Say, in terms of a business model. In Hong Kong, the investor, because Hong Kong is so small, and there are only a limited, a handful of business, or industry. Narrow range of industries? Yeah, so but internet is boundless. And then you don't, the investor, they do not have the opportunity to explore. Ok, so like manufacturing, there's not much manufacturing in Hong Kong. Like e-commerce, in China is already booming, and so the investor in Hong Kong, they don't understand that rule, so it will be easier for me to help the startup out, to get the funding from China, for example Shenzhen. So once I found the first one, we have a substantial amount. So the Hong Kong investor, they will learn why with the same project, I see no opportunity, but the Chinese believe that this is a good opportunity. So I start to help the hungry investors out too, to see the difference. But do you think, in that case, although the investors are a bit more open minded, but are they are also taking too much risk? Certainly. It's a balance, right? It's a balance. No risk, no gain. Because the market size in China is much larger, so they can gamble, you know, big, because... The reward could be bigger? Yes, it can be a thousand times, if you count it by the population size. So that's why it's normal, it's reasonable for the Chinese investor to play more risky game and the competition even also larger. So if a city not taking the risk, your neighbor, your competitors will take that risk. For example, the Pearl Delta River region, actually they are competing with the Zhujiang Delta, and the Zhujiang Delta investors are competing with Beijing. So they are actually three regions competing with each other. So they learn from each other, and then they enhance. So the rules are changing also, to adjust, to adapt to the competition. And Hong Kong, why we are lagging behind and it just started, it because there is no competition in Hong Kong and we don't feel the pain at the beginning, because our traditional business was so good. Ok, then lately, ok, when the, when Shendang and the trading activities are slowing down, so we feel the pain, and then they started up to adjust, also. That's why recently we have a lot of startups. Particularly, nobody knows what is FinTech before, nobody interested in FinTech, but the last couple of months everybody talks about FinTech, because finance is one of the bread and butter of Hong Kong. So without tech, you know, how can these traditional industry can evolve. So it sounds like the competition, because of the regional competition, actually is a good thing to create the urgency and educate each other. Exactly that's why the pace... see, the startup ecosystem in China, they can be equivalent to the Silicon Valley now. Because, Silicon Valley is much larger than the east coast of the United States but in China we have three. And the government also, you know they have the policy to push, to promote startups and entrepreneurship in China. But the investor in that case, are they taking too much risk? They have to, because the size of the game or the pool is much larger. So no risk, no gain, you know. So, if they take small risks in Hong Kong and Hong Kong so small, at the end of the day, you know, the return is limited, but in China, when they pick the right startup and gamble back and the return is huge, can be a thousand times larger than Hong Kong, if you counted it by the population size. What would you see the competition like, I think China has, like, different regions. They are all actually also competing with each other? How does that work? Unlike Hong Kong or unlike the States, we have one and only one center. So Hong Kong is only 8 million people, and in America, the majority of investment only happen in Silicon Valley. But in China is different, because it's booming. The Pearl River Delta, they have one region and then the Changjiang River Delta. Shanghai Hangzhou, they have another system. And then of course, the Zhongguancun in Beijing. This is the first startup hub in China. So they are competing to each other. Because of the competition, on the other hand, they have to retain the talent into their region. So they invested a lot of money, so that to keep their own ecosystem to run well. Because of this, the entrepreneurship, the mindset that everything in the system, changed from time to time, in order to enhance the competitiveness of their own. So, because of the competition, the environment got better, the system got better. So somehow in my mind, they are far better than Hong Kong on the entrepreneurship ecosystem. So is that a healthy dose of competition, so that actually keep them in check, because they have to continue to improve themselves? At this stage, definitely yes, because they were limited to certain kind of rules in China, because it is just only 30 something years time, you know. Some of the rule are still quite outdated. So we need a new set of rules, in particular on FinTech. So, why is China so advanced on FinTech? Because they had no burden. No burden means there was no rule, so that's a stage that the government allowed FinTech company to try the best. But of course, once a problem comes and the government address to it, and they enhance it, and they closed the loophole. So technically, it's a huge sandbox in China. And to us, we need a sandbox, because we have a very fragile traditional system, i have to take good care of, so we need a sandbox. But in China, they are not much. Either the very huge government owned or state owned financial institution, and then, they don't need a lot of nursery. But on the general, is a new form of economy, and there are not many regulation, at the beginning. The rules are not written yet, so it's a lot more rooms to explore? Exactly, exactly, exactly. So when it started, they tested it out, we try it out, and then they closed down the loophole, system is formed, and then now, they are more advanced, you know, than the other countries. Is that the kind of a general way of Chinese business, the government, right? They let you run, and then, they watch closely. If you hit anything like the limit or if you hit something that may cause trouble, then they will start writing the rules. This is how the game is playing, now. But, say, the new Chinese service is a huge startup, so they match well. So to do startup in China and the new government is startup itself, so they dance well together. But would you expect some chaos, as a result? Because, Come on, there's always a chaos, every 10 years. In the America, in the western world, there is chaos, like Brexit is a chaos, certain kind of chaos now. So chaos is there, and it's always there. When the dust settles... A lot of small manageable chaos is better than a huge one, that, that we face in the past, in the old system. So I would rather see more small problems and these manageable problems than... I agree because if there's no chaos, there's no innovation. It's, it's Schumpeter said, a destructive, a creative destruction. That's the way how how economy evolve and innovate. What about, let's say, the supply of talent? If you start a company, whether you are local or a foreigner coming to China, is it going to be a problem finding the right talent, like employees? It depends, on which category. Say, if you look for somebody who are good in local markets, it's easier, because you know they are used to the Chinese market itself and the size. There's a stat, saying that every year, the university graduates size is larger than the population of the whole Hong Kong. So that's why you know the supply is not a problem. It's just as we said before, it's a cultural issue, there's a language issue. So, supply of talent is not the major issue but, if you want them to help you out, to explore the market, say the Western market, there will be a problem. So the supply is not a problem, but to finding the right one and the mentality will be the problem? Even though they are there, it's very easy for them to be stolen by your competitor, because opportunities are there. So if you, if you use the same old rule like the American rules to train them well, to pay them well, or give them whatever benefit, at the end of the day they might jump the wagon next year or a few months later. So pay attention to the cultural difference. You have to find a different way to lock them in. So, it's how to retain them? Exactly, exactly. Not only, are entrepreneurs all these kind of other talents but general workers are there. The topics are facing the same users in China, because they are eager, you know, to be, to get a better life by jumping, you know, that job that changing the job. Right. So, but this would be particularly hot, right, for a foreign, foreigner, coming to China, not knowing the local market, not knowing where to find local talent. How would you advise the foreigner? Say, try to use more outsourcing. OK. Outsource the risk with a partner. OK. Focus on your core business. OK, so, so, you only need actually fuel. Costs. OK. They are really royal to you. OK. And then use Hong Kong as a getaway. OK. To... or sandbox or whatever. OK. Right. To test, to trial your, your, your plan. OK, and then you, you scale it up, into China. They manage the cities in China. So if your market is in China. On the more practical things, right? So, if a young person entrepreneur want to start a company, what about, what other like the procedures and things. Are those actually quite strict forward, or is that quite, quite or quite difficult process? A good question, if you ask the questions a few years back. Yes, quite difficult. To even, open the company. But these days, everything change only, only, in the last twelve months. They simplify all the committee open process. In some cities, it depends. They are not standard rule. Particularly, I say, in Shanghai, the special zones, development zones, they have their own policy, so you can, you can set up a company with ease and somebody will watch you through the process. And the regulations, some of the regulations, they can be translated well, in English too. OK, so pick at the right city, ok? Pick like business friendly, also foreigner... Foreigner friendly area. OK. And pick your right partner is crucial. So it's safe to say that, although, maybe, the existing process and regulation would be somewhat difficult. But on the whole, overall, China is trying to make it easier, trying to simplify things, that's the different, the direction. And I believe that it will be more easier and easier over time, too. OK. So, somehow. So, I talk about Hong Kong? That's what, please... So, so, somehow, we are, Hong Kong is facing an issue, because our system hasn't been changed for long. So, I also find that, it's harder to set up company in Hong Kong, than in certain area in China these days, or to harder to get investors in Hong Kong, than in China. These things are two separate things. I want to consider them separately. Opening company in Hong Kong has always, supposedly always, been relatively straightforward. So, how has that changed these days? Well, because of the, after the financial crisis, ok? Banks in Hong Kong, they are suffering from, you know, the regulatory, say the compliances issues, and they are reluctant to open accounts for certain countries. Particularly, Americans customers. So, so, although opening, opening, starting a companies to rather is easy. Now, having a bank account is a different matter. So, is opening a bank account becomes even more difficult. Very difficult. A few months back. But the government tries to it. And some banks, they are still reluctant to open, due to, you know, the regulatory issue, but, in Hong Kong, we have close 200 banks, so, some banks are they, they can open account for the customer, much easier than some. So don't trade at one right. But in the old days Hong Kong is the place. Very straightforward and all the banks are more or less the same thing. Now China, on the other hand, they are making the process easier for both opening the company and opening a bank account. Exactly. And the second point was about, so investors that you find in Hong Kong are actually, sometimes, more conservative, than the investors in China. Yeah. Because, they are information they, or the knowledge they have are unlimited these days. Right. The source of information. If I may, I think it is also, because of the risk appetite. Yes. So, Hong Kong, the investor indeed, taking less risk. And also, to see some, not only, not only, you know, the mindset, an issue, say, you might not know that Hong Kong has no crowdfunding, an equity based crowdfunding. The law rejected us from doing so. So, from portal based crowdfunding. Yes, we do it just newly, newly only last month, we have kickstarted in Hong Kong, opened an office in Hong Kong, the first office in Asia, to get all these backing products. Base crowdfunding. But equity based. But this is the bread and butter for the new FinTech. So, it's a hot area for FinTech. We need it. Okay. It's not only hot. Because... That's the way forward. We need it for, for the investor, to share the risk. OK. By using this platform, and we do not have such a platform for them to do the proper... That's the way of raising fund. Exactly. A new way. Not future, now, is actually now. Not only future, but in general, the whole world, but Hong... so, that's why. But in China, ok, it's already there, its just the regulation, not catching up yet. So there are some, some, some bad boys, are there, ok? So you have to pay. This is what we talked about before, right? So, in China a lot of things are happening, even though it's not the regulation may not be properly in place, but people already started things and the government takes this view of, let's see how it goes. I will monitor it, will make sure that nothing major, you know, will happen. And then, we start writing the regulations for it. So, exactly, this is. That's why it's moving forward, because it allows things to happen, rather than limited, prohibit it to, to happen, and let's, let's fix the regulation, and then... Exactly. That's a different attitude. To a certain extent, it's quite frustrated. You know, to us, ok? Because it is should be, it should happen in Hong Kong. So, we can, we can open up a new markets. We can, attract a lot of Chinese companies to use Hong Kong. In the past, like our security's market, we attracted them to open their companies and raise a fund in Hong Kong. But for startups, since day one, if they are not in Hong Kong, they will never be in Hong Kong. Say, if they pick Silicon Valley, if they pick Shanghai, as the playground. And at the end of a day, when they do IPO, they would consider Shanghai or New York. So any other advice you want to give to entrepreneurs, who want to do business in China? Advice... A word of warning or something, that they should, they should consider carefully? The rapid changing... everything change rapidly in China. So, if you do a research, so, don't mind to do it, check it out every time, or frequently. Or, you have to raise your ears, you know, to have... to talk to your friends or, or, say, or join a community, particularly, say, if we are, there's a lot of foreign investors, ok? Or, entrepreneurs, ok? Join their party, ok, and get the gossip. Because, it change rapidly in China. So the Chinese market changes rapidly? That's the fun part of it. On the other hand, there is also the risk that taking part. So, it's both exciting, but it's also a big, big challenge. Yeah, yeah. Exactly. Right. Great. Thank you very much and thank you for your sharing . You're welcome. Thank you. Thank you.
