In the 1980s, Japan was a global powerhouse, with the economy and the business sector leading the way. Financial difficulties, which became more evident in the 1990s, are still filtering through the system, but the region as a whole is reemerging as the home of entrepreneurship. It is debatable as to whether investors are more appreciative of risk or simply more understanding of new technology, thereby encouraging start-ups.
Whatever the case, there is no doubt that the rise of entrepreneurship in Asia is attracting global headlines and investment.
The Far East Start-up Landscape
If you compare the Far East start-up landscape to that in Europe and even North America, there are significant differences in the characteristics. We have countries such as China, Japan (even through its economic challenges), South Korea and Singapore, and of late, Hong Kong, encouraging start-up ecosystems which have changed the funding landscape for many companies.
To put this into context, the critical characteristics of Far East start-ups are innovation, scalability and, very often, huge market potential. Of late, we have seen significant developments in FinTech, ESG, and the wider eco-friendly phenomenon.
Factors Driving Entrepreneurship in the Far East
There are many factors driving entrepreneurship in the Far East, but some of the more robust characteristics include:-
Supportive government policies and initiatives
While this has been ongoing for some time across the Far East, Hong Kong is perhaps the latest example of a place where government policies and initiatives are changing the scope and shape of investment markets. Aside from the obvious explosion in FinTech investment, Hong Kong is now very receptive to crypto assets at a time when the likes of the US and the UK are more reluctant to introduce favourable policies.
Availability of venture capital funding and access to capital
Private equity and different types of venture capital funding are more commonplace across the Far East than in many areas of the world. Except for the UK and the US, the deep river of funding and access to additional capital attracts investors to the Far East and new start-ups. Even during these challenging times, we know there are billions of dollars waiting to find a home when the time is right.
Technological advancements and digital transformation
The best example of recent technological advancements in digital transformation is Vietnam. This is a country which has had a chequered past concerning economic growth as well as difficulties attracting overseas investment. However, over the last decade or so, the government has planted numerous seeds which are now coming to fruition.
Vietnam has one of the most developed digital economies in not only the Far East but potentially on a global basis. The wider public, businesses and investors have all bought into the new digital platform, now proving to be a magnet for start-up investment.
Cultural factors and changing attitudes towards entrepreneurship
Historically, the Far East has always positively approached start-up investment and the broader subject of technology. While aware of market conditions, as we have seen in recent times, the flow of funding can change relatively quickly. However, the underlying cultural factors and attitudes towards entrepreneurship in the Far East remain embedded.
In reality, this positive attitude towards entrepreneurship has never really left the Far East. Perhaps it has been reignited of late with the introduction of FinTech and other new areas of business and the flame now burns brighter?
Conclusion
The growth in FinTech start-ups and additional capital investment is the latest example in a long line of new industries emerging in the Far East. For many years this area has been a hotbed of entrepreneurship, and while some may suggest investors take a less cautious approach to risk, this is not necessarily the case. It is perhaps more apt to suggest there is a greater understanding of the risk/reward ratio with new start-ups, focused in a positive manner on the long-term potential. Long may it continue!