Between 2001 and 2011, 203 million Chinese people crossed the threshold into the middle class, a reflection of a booming economy that in 2017 grew by 6.9 per cent.
Consumption in the country has risen steadily during the past decade to an average of more than 50 per cent of household income countrywide.
China is clearly a huge potential market for European start-ups and Intesa Sanpaolo is capitalising on this by developing close ties with the country. In 2018, as part of its STARTIT.asia programme, the Italian banking group took five start-ups to Hong Kong to see the opportunities for themselves and be presented to investors and market players.
Both the bank and the start-ups subscribe to the “circular economy” philosophy, which they believe is not only the correct one for the Chinese market but should also have far-reaching global implications. The goal is to redesign the lifecycle of a product, aiming for a society with zero waste.
Alessandro Vitale, head of the Intesa Sanpaolo Hong Kong hub, says that great care was taken when choosing the visiting start-ups to ensure they “showed what the Italian companies could produce in terms of innovation and also what the Hong Kong environment and ecosystem could need”.
Antonello De Riu, consul general of Italy in Hong Kong and Macau, says: “For the five start-ups it is a huge opportunity because here you can have venture capitalists, business angels, incubators and, at the same time, they have the chance to meet industrial partners face-to-fsce. We are confident they will be very successful.”
STARTIT.asia included an eclectic range of companies. Among them were Hexagro Urban Farming, which pioneers food production in dense urban spaces, and Wenda, a food integrity tracking solution that tackles food waste and food-safety challenges. Yet the opportunities in China are not confined to solely agri-tech and food-tech. There is also the potential for Italian companies to expand into sectors more traditionally associated with the region, such as fintech.
"You have to engage yourself, demonstrating your willingness, your fairness, in the business. But you will be rewarded for that"
Antonello De Riu, consul general of Italy in Hong Kong and Macau
“You have more than 75 per cent of the top world banks here and the access to capital have recently become very approachable for start-ups,” explains Karena Belin, co-founder of W Hub, which represents the Hong Kong start-up community. “We already had more than 300,000 SMEs. So you can see that infrastructurally it is a great place to do business.”
As Massimiano Tellini, head of circular economy at Intesa Sanpaolo, adds: “There is an incredible amount of finance going into innovation. Hong Kong by itself is a harbour for innovation going forward – and a lot of activities in the smart cities and smart technologies for the future.”
While the opportunities are immense, Antonello De Riu believes that before they even think about expanding into the region, European companies need to be aware that Chinese people attach great importance to personal relationships based on trust and commitment.
“This is a country where you have to come and you have to stay,” says De Riu. “You have to engage yourself, demonstrating your willingness, your fairness, in the business. But you will be rewarded for that.”
Ultimately, Stefano Passarello of STARTIT.asia speaks for many growing businesses when he says: “I cannot think of a better place to start my start-up. It’s probably the best place in the world even in terms of value for money.”
One trillion reasons why we need a circular economy
Intesa Sanpaolo has joined forces with the Ellen MacArthur Foundation to help businesses recognise their systemic responsibilities and capitalise on redesigning their business models through regenerative innovation
Growing the real economy in Asia
Innovation and flexibility in structured finance have allowed Intesa Sanpaolo to thrive in the hothouse of Hong Kong