Hong Kong needs to join forces with neighbor Shenzhen to turn itself into a true innovation and startup hub, observers in the southern city in Guangdong province say.

Renowned as the heaven for hardware companies given its proximity to the huge Pearl River Delta manufacturing base, Shenzhen is already luring many entrepreneurs from Hong Kong to join its burgeoning startup scene, they claim.

Ricky Leung and Data Ng, both University of Hong Kong graduates, are among the growing group. They first set up their business in Hong Kong but have now relocated their 3-D printing business to the Qianhai Free Trade Zone, in Shenzhen.

"Hong Kong investors are mainly from a banking or financial background, while new investors from the Chinese mainland are normally second-generation, who understand the ways of the entrepreneur and his needs far better," Ng said.

Donny Siu, an adviser at the Entrepreneurship Center at Hong Kong University of Science and Technology, said mainland investors are also more willing to take risks than their Hong Kong counterparts, who generally make smaller, more cautious investments.

Deng Yongqiang, chairman of Qianhai Houde Entrepreneur Incubator, also believes the ecosystem in Hong Kong and the local government are not supportive enough to young entrepreneurs, stressing that officials often have little understanding of new innovations or the needs of startups.

"Hong Kong is not suitable for entrepreneurship. But Hong Kong people are," he said, adding he is a strong supporter of Shenzhen-Hong Kong cooperation.

Deng said good ideas and projects in Hong Kong need the support of the massive mainland market, however, as well as the funding and services on offer there.

Deng Yanzi And Chai Hua