The Asian 'tiger' that ignored hi-tech

PUBLISHED : Sunday, 18 April, 2010, 12:00am
UPDATED : Sunday, 18 April, 2010, 12:00am

My visit to Silicon Valley last month coincided with the debut of Apple's latest gadget, the iPad. Combining the ease of portable computing on a touch-screen tablet with an avalanche of internet applications, the iPad was an instant winner. Even in recession-beaten Palo Alto, long lines formed at the Apple Store.

The success of Apple's series of i-products holds many valuable lessons for all Silicon Valley wannabes and hi-tech aspirants. First, it drives home the brutal reality that successful technological innovations are disruptive: just as digital technology killed Kodak's film business, more recently Apple's iPhone and Research in Motion's BlackBerry have wiped out the once-dominant Palm personal digital assistant. Now cloud computing - internet-based computing using shared resources - threatens to make desktop computing obsolete. Technological innovation is veritably Schumpeterian 'creative destruction' in action.

Second, as Stanford University's Professor Charles House puts it in the simplest terms, innovation is the implementation of invention. Scientific invention is one thing, but turning it into an innovative product is another. Apple founder Steve Jobs may have few scientific inventions to his name, but he is the only Silicon Valley entrepreneur to churn out one exciting product with broad consumer appeal after another.

Third, the ability to make megabucks usually comes with possession of intellectual property. American communications giant Qualcomm, for example, derives much of its revenues from royalties for its CDMA wireless technology and other patents. China has learned the importance of intellectual property the hard way. If a DVD player made in China sells for U$32, the manufacturer typically collects a profit of US$1 while US$20 goes to the intellectual property owners.

It is hardly surprising that nations (or cities) which prioritise technology-based innovations set high store by their population of engineers and the quality of their maths and science education. In the digital era, other ways of adding value without employing technology certainly exist - notably by branding, design and craftsmanship. But nothing can be won by copycat gimmickry.

Among Asia's proverbial 'Four Little Tigers' of the 1980s, Hong Kong remains the odd one out, still living in non-comprehending neglect of the power of technology. The city's puny size is no excuse for this staggering oversight; Singapore is smaller geographically and in population. Yet, determined to succeed, it has pulled out all the stops to lure technologically advanced multinationals and top-notch scientists.

Taiwan, thanks to the true grit, courage and vision of its leaders in the 1970s, can now justly boast of being the world's largest electronic subcontractor; home to the most successful silicon foundries and many producers of competitive, hi-tech electronic products. Similarly, South Korea has developed a reputation as a leader in creative industries, computer graphics, internet games and applications.

So where has Hong Kong fallen short? A confluence of factors has combined to hold it back: its time-honoured reliance on trade and traditional, laissez faire philosophy; a 'borrowed place, borrowed time' mentality; windfall profits from China's economic ascendancy plus its leaders' lack of vision and expertise. All have contributed to entrenching Hong Kong's lopsided reliance on property and financial speculation and its underweighting of technology.

Is it too late to turn the tide? As Guangdong plans to move into areas that Hong Kong has traditionally relied on for its livelihood, not striving to turn the tide is not an option. The government needs to move fast to foster an environment that will make technology-based enterprises thrive. With harder work, it may still be possible for Hong Kong to bring home the golden fleece.

Regina Ip Lau Suk-yee is a legislator and chairwoman of the Savantas Policy Institute