Hong Kong is poised to become Asia’s leading e-commerce distribution center, according to a leading venture capitalist.
“Hong Kong has tremendous strengths for e-commerce,” said Hanson Cheah, executive director of AsiaTech Ventures. “It has been the Asian headquarters for many things. It is a wonderful place for distribution from, with its world class logistics.”
AsiaTech Ventures is a leading Asian venture capital firm that focuses on Internet and IT industries and manages three Internet related funds totaling US$57.7 million dollars.
Cheah told InternetNews that Hong Kong is the Asian distribution headquarters for movies, music, books and other commodities, all of which could be sold over the Internet.
However, to become a regional e-commerce hub, he believes that it is absolutely key for Hong Kong to develop a broadband infrastructure like some of its neighbors. For example, Taiwan is coming up with cable TV based infrastructure and Singapore is developing an ADSL infrastructure.
“I am waiting for the Hong Kong Government to bring broadband Internet services above 1 mbps to every household,” said Cheah.
“A lot of work still needs to be done by the government even though HK$5 billion has been dedicated to a science and research park. The Hong Kong Government is always struggling between a laissez faire approach versus government intervention.”
Nevertheless, Cheah concludes that in five years the Hong Kong Internet industry will have two or three broadband ISP’s, a large amount of firms implementing network services for SME’s, and a cluster of companies developing Web technology particularly for the bilingual market.
Cheah and his partner, James Yao, started AsiaTech in August 1997 differentiating quickly from other Asian vc firms by providing technical and operations expertise.
“We saw the opportunity and we saw the fact that this model really works in Silicon Valley,” said Cheah. “Granted the market isn’t as big as Silicon Valley but there wasn’t even one company doing it.”
AsiaTech’s two privately funded initiatives for Internet businesses include the US$18.5 million AsiaTech 1 fund and the US$20 million AsiaTech 2 fund.
These funds have provided venture capital for a total of 16 firms primarily from Asia and the United States with the Asian operations of E*Trade and CNET among them.
In November 1998, AsiaTech gained significant prestige when it was appointed by the Hong Kong Government to be one of three firms to manage its HK$750 million (US$100 million) applied research fund.
“The government’s fund legitimizes us,” said Cheah. “Before this, we were just two young guys who started a small venture fund to invest in Internet entrepreneurs in Hong Kong and other places.”
Now, according to Cheah, they are thought of as “. . .technology people that know what do with venture capital, that is to create a cluster of entrepreneurial hybrid technology companies.”
AsiaTech, nonetheless, does have competitors in Hong Kong that would like to acquire its mantle.
However, China Internet Corp. (CIC), the largest investor in the Hongkong.com Studios fund, already had substantial equity in Web Connection well before the announcement.
Some industry analysts are, therefore, cynical of the Hongkong.com initiative to fund Internet development.