I just returned from Hong Kong to my web development shop in Salt Lake City, after speaking to web developers expo. I was able to dive into the nascent-yet-active startup scene thanks to the SME Creativity Center (SMECC) Calendar, a government-backed initiative, which included startup-related events I could attend almost every night.
In Hong Kong smartphone penetration hit 87% by the end of 2012, compared to 78% in the U.S. But Hong Kong is puny with barely 7 million inhabitants. Shanghai is moving toward a population of 24 million. Beijing has passed 22 million. And China as a whole is nearing 1.36 billion. China is big. There are a lot of people there. Yeah, you know all this, even if you don’t know the exact numbers.
Here’s what you might not know. Internet penetration in China is 42.1%. At the end of 2012 there were 564 million Internet users in China, 330 million of whom were using smartphones to access the Internet. By the end of 2013 the number of mobile Internet users in China will surpass 500 million. Hong Kong is a well-connected city when it comes to the Internet. China is catching up, and the stakes are much higher.
For startups, the opportunity comes from mobile apps. The app developers in Hong Kong can sometimes have a limited vision as Casey Lau, one of the pioneering voices for the startup community in Hong Kong recently pointed out, noting the number of app developers he knew of creating "happy hour" apps designed to help you find the cheapest drinks in town. Why design an app that appeals to perhaps 50,000 people, when you could create one that would be used by tens and perhaps hundreds of millions?
That’s what messaging app company WhatsApp has done. The app was created by Silicon Valley pair Jan Kuom and Brian Acton in 2009, but I had to go to Hong Kong to learn about the software. In the U.S. I have unlimited texting on my phone, and so does everyone else I know, so such an app like WhatsApp which allows you to send text messages using your data plan instead of your texting plan has little appeal. But in Hong Kong where unlimited texting isn’t a common option and texting from one carrier to another can get expensive, the app is wildly popular. Although it faces competition from native Chinese competitor WeChat as well as other similar apps, I’m reasonably confident Kuom and Acton are glad they focused on messaging rather than happy hour.
What’s this mean for you? You could target the middle class without leaving your current comfort zone by hiring a software developer, creating an app, and getting a chunk of those 500+ million Chinese smartphone owners to download it. Or you could invest in an up-and-coming startup in the region, like Hong Kong-based SnapTee, which in February raised $600,000 in seed funding to develop a simple app that turns smartphone users into T-shirt designers. Whether you go there virtually or in person, the advice from the time-traveling character played by Jeff Daniels in the 2012 film Looper seems applicable: "I’m from the future. You should go to China."
Josh Steimle is CEO of MWI.com, a Utah based SEO and Internet marketing company. He has 15 years experience in starting and running tech companies. He is moving to Hong Kong in June of 2013 to open a branch office of MWI.
[Image by chrisjtse on Flickr]