Intellectual property (IP) represents one of the most valuable yet underutilised assets for small and medium-sized enterprises (SME) and start-ups. As Hong Kong positions itself as a regional IP trading hub and international innovation and technology centre, it’s crucial that local SMEs and start-ups leverage the city’s advantages: a robust legal system, strong IP protection, abundant financial resources, huge potential for commercialisation and a wealth of IP expertise.
The Hong Kong government’s commitment to nurturing IP-driven innovation is evident through various initiatives, including the HK$2 billion (US$257 million) Innovation and Technology Venture Fund (ITVF). By the end of October, the government had invested about HK$305 million in 38 local I&T start-ups through the ITVF, with businesses covering supply chain management, e-commerce, financial technology, biotechnology and artificial intelligence (AI).
While Hong Kong ranked 18th globally in the World Intellectual Property Organization’s 2024 Global Innovation Index, one striking statistic reveals that almost 98 per cent of patent applications in the city in 2022 came from non-residents.
To encourage greater local participation in IP trading, particularly among the industrial and creative sectors, the government introduced the competitive patent box tax incentive in July. This reduced the tax rate on some profits from IP income from 16.5 per cent to 5 per cent, a move that strengthened our position as a global IP hub.
Strategic IP management can be a game-changer for Hong Kong’s growing stable of SMEs and start-ups. Take for example Universal Basketball League Limited, a local IP company that has joined various Trade Development Council conferences. The company has expanded beyond its comic IP roots by launching a comic-themed basketball school, effectively growing its presence from Hong Kong to Malaysia. This shows how proper IP deployment can transform a creative concept into a thriving business model.
However, many business owners struggle with IP valuation and marketing, finding it challenging to navigate different forms of IP including patents, trademarks, copyrights and trade secrets. One particularly underutilised growth mechanism is IP financing.