Global Snapshot: Top Tech Hubs To Grow Your Business
Originally published on Hawskford.com
Technology companies often experiment and innovate as they scale and grow. Most recognise that while some practices can be challenged to unleash new innovative ways forward, there are areas of tax regulations and local compliance which can’t be circumvented. Choosing a thriving business environment or outsourcing your requirements to a specialised corporate service provider that can help you navigate the complexities of a growing business are key. We review a few emerging tech hubs around the world and examine their right to be crowned a supportive hub for fast growing technology companies.
Tech companies on a steep growth trajectory often find themselves dealing with a whole new level of issues around business processes, human resources and regulatory or reporting governance and compliance. Without the right infrastructure in place, many stumble when making that leap from having a smaller early adopter customer base to widespread adoption across many countries. Expanding your business into these tech hubs offers not just access to investors and fast-growth markets but also to an existing infrastructure of support, ensuring the lights stay on through the next transformative growth spurt.
Singapore
Singapore might be better known as a financial hub, but recently it has planted its flag in technology with tech giants such as Facebook and Google setting up their regional headquarters on the island. There is solid government backing to grow the tech sector with grants, tax incentives, infrastructure. Singapore's prime location in a fast-growing region attracts top tech talent from around Asia.
The government has several incentives to attract start-ups. Incentives include access to financial schemes on the basis that they qualify for criteria set in place. For deep tech start-ups, the government provides 70% of funding in the initial investment of S$500,000. They will also invest S$1 for every S$1 from private investors up to a S$4 million investment cap.
Tax and accounting compliance can be a challenge for fast-growing tech companies; Singapore has business-friendly policies with its single-tier corporate tax system, where companies and individuals are only charged on profits made in the country. However, there are numerous sector-specific tax incentives that technology companies can unlock by speaking to a local tax specialist.
Depending on your company’s needs, Hawksford can partner with you as your bookkeeper, accountant, controller, business adviser, part-time CFO — or the entire Accounting and Finance department. Talk to our accounting and tax specialists today.
Hong Kong and Greater Bay Area
Hong Kong’s entrepreneurial culture has seen the number of start-ups grow by 18% in 2018. It is building its strengths in biotechnology, artificial intelligence, smart city and financial technologies and collaborating with neighbouring cities such as Guangdong and Macau to form the Greater Bay Area as a platform for companies looking to access China, and for Chinese tech companies to internationalise.
The Hong Kong government has since introduced a few funding schemes to support SMEs in innovation and technology projects. One of them being The Greater Bay Homeland Development Fund providing a financial boost of over HK$100 billion for technology industries in the GBA.
It has risen to fourth place in the Ease of Doing Business and its main attraction has been for its efficient market. Hong Kong offers one of the lowest tax jurisdictions in the world at 16.5%. Similarly, companies only pay taxes on purely Hong Kong sourced income in an effort to provide tax relief for foreign income.
It has moved up to eighth place in World Digital Competitiveness. These are all thanks to its ability to build up its talent and education agility. In January 2019, the government has approved about 3,815 research positions under the Innovation and Technology Venture Fund to assist in research and development projects. To find top tech talent, tech companies will need to work with locally based companies who understand the motivations and market requirements of prospective employees.
In May 2020, China’s central bank and financial regulators unveiled a sweeping plan to spur cross-border financial services, transactions and investments between Hong Kong, Macau and nine Guangdong provincial cities to develop the so-called Greater Bay Area (GBA) into one of the world’s largest economic regions. Under the plan, residents of Hong Kong and Macau can buy wealth management products sold by Chinese banks in the region, while the inhabitants of the Guangdong cities can tap financial products sold by the banks in Hong Kong and Macau.
Hawksford have assisted many international tech clients to grow and expand their operations in Hong Kong and China, taking care of the recruitment, corporate, legal, accounting, payroll and tax administration requirements. Talk to our specialised Hong Kong team today
Shanghai
China’s tech cities have seen a higher share of venture capital investment than their US counterparts in 2018 and Shanghai’s cosmopolitan vibe has attracted the tech-savvy from around the world.
The Chinese government has been shelling out funds to support several start-ups. There are around 780 government-related start-up funds worth $1.6 billion channeled nationwide.
Shanghai has steadily risen to 35th place in the Innovation Cities Index. Over 40 percent of top-level scientists under 35 would choose to work here for its research funding support and its high-tech industries and research infrastructure.
It is quickly becoming the next tech hub and placed third in Start-up Ecosystem Strength. Under the Master Urban Plan, visitors with a green card can open technology firm and start limited liability partnerships. However, the arrangement for working visas vary from city and city and it is important to understand local requirements before deciding on your next business location.
Hawksford employs local and international experts in 5 cities in mainland China. We provide specialist knowledge in foreign employment and related obligations for areas such as payroll. Explore your options today.
Berlin
Berlin has always had a reputation for doing things differently and it’s no different in the tech hub scene. The city’s creative spirit has been channeled into technology innovation as tech founders look for a more affordable option within Europe. Aside from high-profile success stories like SoundCloud, established companies like Siemens have also set up incubators in the city.
Berlin moves up to seventh place in Start-up Ecosystem Strength garnering about 11% of start-ups from outside the country. It offers public loans to local and foreign entrepreneurs up to 100% of costs up to 25 million euros. Digital health, technology and cyber-security has seen significant growth. The German capital has been named as the 14th innovative cities with more than 40 technology incubators.
Depending on your lifestyle, residents will find Berlin quite affordable, scoring 81st in Mercer Cost of Living. People enjoy a higher quality of life with Berlin ranking 13th in Mercer Quality of Living with better access to healthcare and infrastructure facilities.
London
London’s heritage as a global business and financial center puts it in good standing as a tech hub. World-renowned universities are a fertile ground for research while its proximity to Europe’s busiest airport ensures easy connectivity. Its tech hub status has seen successful fintech start-ups such as TransferWise and Funding Circle.
London closes at the top three in Start-up Ecosystem Strength. Under the government’s Start-up Loans Scheme, new businesses that set up shop at the capital can apply for a loan up to £25,000 at fixed interest rate with up to 12 months of free mentorship. London has business-friendly regulations which attracts leading talent from all around the world making it a great city for business growth.
It is the second most innovative city in the world. Recently, fifteen London councils teamed up to help 32 local boroughs to scale up digital innovation, with a potential budget of £600,000 per year.
London holds 22nd place, according to The Economist Cost of Living Index therefore companies will need to consider where their set-up their office locations and headquarters. London, however is Europe’s most accessible city which uses low-cost rail and air links to reach global territories efficiently so this makes commuting extremely simple.
Incorporating and registering a tech company in London can also allow for easy access into Europe, the Middle East and African markets. If you need expert guidance around how to set-up your company in the UK, contact our London based experts today.
San Francisco/Bay Area
This epicenter of tech has been home to the biggest tech companies, attracting the most innovative talent and business ecosystem to fuel growth. The Bay Area’s high draw has driven costs up, driving professionals to work remotely or move elsewhere. But as long as technology from San Francisco continues to influence how we eat, live and work, its importance will not diminish.
Silicon Valley holds the top spot in the Start-up Ecosystem. There is an abundance of incentives including, payroll tax exclusion for up to ten years for clean technology firms with less than 100 employees. It may help to engage with a payroll and tax specialist to ensure you are making the most of the incentives and benefits available to your business. It holds the spot as the third innovative city and for good reason. Between the year 2011 to 2015, it has filed about 34,000 international patents from which, Google accounts for 6.5%.
Yet, the Bay Area has its drawbacks as a place to live. San Francisco has one of the highest crime rates in the US. There is a one in 14 chance of becoming a victim to violent or property crime. Within California, more than 99% of communities have a lower crime rate than San Francisco.
Toronto
Thriving Toronto offers an attractive mix of high living standards and affordable living – drawing research centres in data science and artificial intelligence to set up shop. Its diverse population – half of the population originate from a foreign country – offers a broad tech talent pool.
Toronto ranks outside the top ten Start-up Ecosystem Strength, coming in at 15th place. The Canadian government has a significantly low corporate income tax rate at 26.5 per cent, making operation costs cheaper and attractive to business start-ups.
It considers the role of talent to support its innovation-driven economy. For this reason, it stands in the top three top tech talent markets in North America and it is the fastest growing job market for tech positions, adding about 28,900 jobs in 2017.
Toronto is one of the expensive cities to live in Canada, ranking 115th in Mercer Cost of Living. However good thing is- those who move here find that is one of the most livable cities in the world at 16th Mercer Quality of Living. In comparison, it is much cheaper than living in Europe or the States.
Why tech hubs will thrive
Expanding into these tech hubs can accelerate your business growth as tech workers and investors tend to converge in these few locations. Their proximity to high-growth markets such as Singapore to Southeast Asia and Hong Kong to North Asia means access to millions of tech-savvy customers.
While the business and regulatory environment of tech hubs tend to value and support entrepreneurship, proper local market guidance is critical to ensure that your growth trajectory in a new territory will be a smooth one. For a seamless transition into a new tech hub, it may be beneficial to partner with a corporate service provider and outsource your incorporation, accounting and tax, immigration and business support needs, so you can focus on growing your business.
Disclaimer:
This article is intended for general information only and is not intended to apply to any specific situations or to constitute legal advice.