What do Hong Kong developers need to thrive in the mobile app development?
By Emily Chung and Silvia Li
It is eight o’clock in the morning and the MTR carriage is filled with commuters flocking to work and students travelling to school. Apart from the station announcements and the sound of music leaking out from passengers’ headphones, the carriage is eerily silent.
People keep their heads down, their fingers tapping away at their smartphones and tablets. Some of them are reading the morning news, some are searching for bargains and others are fighting intergalactic battles – all on mobile apps.
After the dot-com bubble burst at the turn of the century, the rise of smartphones in recent years has spurred a revival in the innovation-technology domain.
This new IT boom started when Apple launched its mobile apps distribution platform, Mac App Store in May 2008. Later that year, Google launched a similar platform, now known as Google Play. Since then, developers have been able to sell their products in a global marketplace by paying just US$25 a year for Google Play or US$99 for Apple’s App Store.
Seizing on the opportunities these developments presented, some young developers in Hong Kong are creating start-ups specialising in apps. Four Directions, run by Rick Woo Man-yuen and his partners, is one of the most successful examples.
Woo recalls that the four partners chewed over their plans in an upstairs cafe in 2010. Apart from creating apps, they also handled digital projects for clients. Woo says the partners did not earn a salary for the first six months.
A year later, they developed AppGreen, a web-based service that allows subscribers to create their own mobile apps without the need for any programming knowledge and at low cost. AppGreen was Four Directions’ breakthrough product and won a Top 100 Asia award from the leading innovation magazine, Red Herring, which is known as the “bible of the Silicon Valley”. Woo’s company was the only one in Hong Kong to win the internationally recognised technology award that year.
With the award came recognition from clients and Woo says the company became more and more successful in pitching their business. Later, they also joined the Small Entrepreneur Research Assistance Programme (SERAP) run by the Innovation and Technology Commission and obtained extra funding of HK$1.26 million to carry out research and development.
The future seems promising for Four Directions, which currently has a team of 38 staff. But Woo points out that it has become exceedingly hard for apps to fare well, as thousands of new competitors enter the market each day.
“Only a selected few, such as Tower of Saviours and Angry Birds, have succeeded and gone viral whilst most have sunk unnoticed,” he says. “People won’t invest arbitrarily as there are too many companies of the same kind.”
Woo hopes to reach a variety of investors, both local and overseas, to get more funding but, despite his company’s early successes, he is cautious about his prospects. He says Four Directions is good but not the best in the field and therefore he finds it hard to reach the investors.
Teddy Lo Ming-tao takes a slightly different view. Lo, whose great grandfather Ho Sin-hang was one of the founders of the Hang Seng Bank is a local angel investor – that is an investor who backs and supports start-ups – in mobile apps. Five years ago, he set up Noir FX, a venture capital fund mainly targeting app-making start-ups.
So far, Lo has invested in six apps, three of which were developed in Hong Kong, two in Japan and one in the Mainland. Lo says that as long as the app designs show potential, there are investors in Hong Kong who are willing put not just their capital into start-up companies, but also offer support and advice through their business connections.
“Investors are always willing to talk,” he says. “App makers should be more aggressive and active in seeking investors.”
The difficulty then for lesser known start-ups is how to get on the radar of investors like Lo. That is not a problem for Terry Tsang, co-creator of the popular game app, Tower of Saviours. Tsang and his brother started their company, Madhead, from scratch. They began with making customisable e-cards, followed by online polling websites and a discussion forum.
After several unsuccessful attempts to expand their business, they soon turned to the app game market and developed Tower of Saviours.
In August this year, Tower of Saviours became the first app from Hong Kong and China to break into the top 10 of best-selling apps on Google Play. There have been some suggestions that the game draws heavily from the Japanese app game Puzzle and Dragons, but this has not deterred players. The game has been downloaded by seven million users around the world and is the highest-grossing app in Hong Kong, Taiwan and Malaysia.
With those kinds of numbers, Tsang has no difficulty in reaching investors. The company is doing so well that Tsang has even turned down a couple of investors who approached them. He says he is afraid investors may interfere with their plans for business development. Through the open and fair app market platforms, Tsang says he is able to expand his business solely with the revenue from Tower of Saviours.
“Before App Store and Google Play, it was almost impossible to make a console game unless you were from a big company,” says Tsang, “With a lower entry threshold, people can pursue their dreams. Now even a university student can create an app.”
Both Tsang and Four Directions’ Rick Woo believe the government could be doing more to help their industry. But Tsang believes what the government does offer is either not widely known or is under-utilised.
“The government doesn’t give a lot of resources, but they are there. What’s interesting is that people don’t apply for funding as they think the amount available is too little. So in the end, it’s really easy to get it if you apply.”
As for Madhead, its office is located in the Hong Kong Science Park, where it has been exempted from paying rent for the first two years. With a sweetener from the government and an efficient, low-cost platform for selling his products, Tsang’s greatest concern is the difficulty in recruiting expertise in the field.
Unlike in Taiwan, there are no undergraduate degrees on games programming in Hong Kong. Universities may offer courses in programming, but not majors. Only the Institute of Vocational Education (IVE) provides such programmes.
Tsang adds Hong Kong lacks successful role models and flagship companies in inno-tech, and therefore few people join the industry.
“In the US, many university buildings are named after Bill Gates and HP. In Taiwan, many teenagers dream of becoming entrepreneurs whereas in Hong Kong, you can only think of property tycoons Lee Ka-shing and Lee Shau-kee. People do not dream of venturing into this field.”
To help remedy the situation, the representative for the Information and Technology functional constituency in the Legislative Council, Charles Mok has proposed the setting up of a Technology and Communications Bureau, on top of the existing Office of the Government Chief Information Officer (OGCIO) and the Innovation and Technology Commission (ITC).
“The setting up of this bureau would not only enhance the image of the inno-tech industry, but it could specifically develop the industry, from nurturing talents to marketing and investment,” he says.
Currently, the ITC is just a subsidiary branch under the Commerce and Economic Development Bureau (CEDB). Mok says the limited resources offered by the CEDB makes designing and executing industry policies very difficult.
Without the status and authority of a bureau, these existing bodies are in a weak position to negotiate terms with other bureaus, like the Education Bureau, for cooperation in carrying out policies favourable to the inno-tech sector.
But while Mok believes the government should be playing a more active role in promoting and supporting the industry, financial analyst and former executive director of UBS, Stephen Wong Yuen-shan, says the government should not bear the responsibility.
“It is quite silly to ask the government, a bureaucratic setup, to innovate,” says Wong, adding that unlike the Singapore government, the Hong Kong government should not interfere with the market since it has little experience in directing market resources.
However, it seems the government has taken notice of calls to bolster Hong Kong’s technology innovation from the bottom up. In the recently published consultation document about the Digital 21 strategy, the government proposes to introduce programming into the primary education curriculum.
Legislator Elizabeth Quat Pui-fan welcomes the reform. What is more, she thinks creativity as well as technological capacity should be nurtured from a young age.
“The education system does not support it (creativity), parents do not encourage it, and there is no space, culture and environment,” she says. “Even if we have the technology, we still lack creativity.”
Quat adds it is important that children move from merely being users of technology to becoming programmers. “Programming will be an international language in the future, therefore we need the vision to look ahead to the future environment,” she says.
Stark Chan Yik-hei, popularly known as the Son of the Star after winning the prestigious Intel International Science and Engineering Fair award at the age of 15, would be the first to agree. After winning the award, Chan had many chances to participate in inno-tech projects and enrolled at the University of Science and Technology two years earlier than the average local student.
Having declined three well-paid job offers after graduation, Chan co-founded the app-making company, Bull.B Tech. For Chan, the problem is not so much a lack of investment or government support as one of mindset and attitude. Hong Kong’s would-be tech innovators fall down in their ability to execute their ideas and willingness to take risks.
He thinks people in the Mainland may not be so adept at creating something new but they remake and even improve original ideas really quickly. “But Hong Kong people tend only to talk the talk without walking the walk,” says Chan.
Still, he is optimistic about the future and believes Hong Kong innovators need to play to their advantages “Hong Kong people, being more attentive, can achieve better on graphic design and creativity,” he says. “On the other hand, we are close to the Chinese market, and we have global insights. We have more chances to repackage successful apps from overseas and take them all the way to the Chinese market.”
Chan also believes introducing programming earlier will allow students to better pursue their interests in technology and he hopes Hong Kong can produce globally influential inno-tech products – a goal he has also set for himself. “I have always wanted to create a platform for a multitude of users; something that rocks the world,” he says.
Edited by Vivian Ng