Many cities aspire to become the next Silicon Valley. Shenzhen — once a capital for copycat products — is now a key driver of the Chinese answer to Silicon Valley: the Guangdong-Hong Kong-Macao Greater Bay Area. In an address marking the 40th Anniversary of China’s first special economic zone, President Xi Jinping called for Shenzhen to create “another miracle” in the next phase of China’s economic reform.

The rise of Shenzhen is driven by the explosive growth of its tech sector. To date, Shenzhen is home to some of China’s most successful tech giants, including Tencent and Huawei. In 2018, Shenzhen’s GDP surpassed Hong Kong’s for the first time. Other cities in the Bay Area have also announced their respective plans to open up their financial markets including a Nasdaq-like stock exchange in Macao and a carbon futures exchange in Guangzhou.

Notwithstanding being home to 96 billionaires (with a combined net worth of US$280 billion) according to Wealth-X’s Billionaire Census 2020 report, critics say that many successful entrepreneurs in Hong Kong still rely on the “old money” from conglomerate businesses, finance and real estate. In the tech sector, Hong Kong appears to be lagging behind its Bay Area counterparts. As of 2019, only nine out of 43 unicorns in the Bay Area were from Hong Kong.

Now, the city is facing a perfect storm as a result of the China-US tensions and the coronavirus pandemic. Can Hong Kong reinvent itself to capitalize on the new opportunities arising from the crisis?

Contrary to the ecosystem in Silicon Valley, in which many of the world’s best-known tech companies such as Google, Cisco and Yahoo have their deep roots in Stanford University, the pool of talent and expertise in Shenzhen comes from China’s tech giants and Shenzhen’s manufacturing prowess in the past decades.

Despite its renowned alumni network, from Tencent’s Pony Ma Huateng and Charles Chen Yidan to Huawei’s Sabrina Meng Wanzhou, Shenzhen University has yet to be recognized by international rankings. Instead, Hong Kong has three universities among the top 10 in the region, according to the Asia edition of the QS World University Rankings this year. The contrast reveals that Hong Kong has a unique position when it comes to human capital and strong research and development capacity.

As Albert Wong, CEO of Hong Kong Science and Technology Parks Corporation, said at the inaugural Global Innovation and Technology Forum last month, Hong Kong is putting a lot of resources into technology but the challenge it faces, despite its solid base of research and development investment, is how to transform scientists into innovators and ultimately entrepreneurs.

The second obvious advantage of Hong Kong is its financial market. As one of the world’s largest financial centers with some US$10 trillion of dollar transactions in 2019, its abundant capital is a godsend to tech start-ups and innovations for fundraising and exits.

In the face of the geopolitical tensions between China and the United States, Hong Kong has the potential to lure back those Chinese companies listed in the US such as Youdao and leverage the financial market of Hong Kong as the primary fundraising hub in the region. However, it is subject to whether Hong Kong Exchanges and Clearing is able to amend its listing rules by enabling the initial public offerings of companies whose corporate shareholders own more voting rights than other investors.

Last but not least, Hong Kong could be a springboard for Chinese technologies amid the China-US “tech war”. In the new phase of China’s economic development, its focus is now shifting to a “dual-circulation” strategy — a combination of “internal circulation” and “external circulation”. For the latter, businesses in Hong Kong could help mainland technologies to be integrated with Western technologies before going international.

However, there is competition. Singapore, Hong Kong’s traditional rival, has almost the same advantages outlined above. The Lion City was even named the world’s most open and competitive economy by the World Economic Forum’s Global Competitiveness Report last year. Some Chinese tech firms such as ByteDance and Tencent have also announced their plan to leverage Singapore as their beachhead for the region.

Unlike Singapore, the Hong Kong SAR government adopts a hands-off approach under its “positive non-intervention” policy when it comes to business development, expecting the private sector to take the lead. Left to their own devices, businesses in Hong Kong need to act fast to reinvent themselves to meet the new market reality and to capture the new opportunities arising from the Bay Area before it’s too late.

The author is the founder of Brianstorm Content Solutions and the author of Stepping Inside a Foreign Land — Russia.

The views do not necessarily reflect those of China Daily.