Tech chief should bite the bullet and tackle Hong Kong’s property tycoon oligarchs
As Cyberport chief, Nicholas Yang’s position was best described as building maintenance rather than technology development
If you are working in an industry of artifice and you know how artificial every single idea must be, you almost find it too easy to believe that other people are looking at it as if it is real.
When you are in the technology industry you are selling fantasy. That is how the government’s most recent initiatives to modernise and digitalise Hong Kong look to outsiders and taxpayers.
Last week, Innovation and Technology Bureau chief Nicholas Yang Wei-hsiung set a target for Hong Kong’s transformation into a knowledge-based economy from its financial services mainstay within 10 years. Yang emphasised the creation of high-value-added manufacturing industries through reindustrialisation, and developing regenerative medicine and healthy ageing through the concept of a “smart city”.
“We need to diversify our economy because our service sector is not providing enough quality jobs for young people,” Yang said. “We have economic growth, productivity growth, but the jobs are not good enough. Our young people need diversity of jobs.”
Yang and his bureaucrat colleagues appear to have conjured up these urgent sectors for Hong Kong without any public or professional consultation. The thought process sounds as unscientific and superficial as former chief executive Tung Chee-hwa’s “hubs” concept, which sought to develop Hong Kong as a centre for Chinese medicine. Being an international wine hub was the only one that took off because it was simple and complemented Hong Kong’s well-developed warehousing, logistics and retailing infrastructure.
Yang should display courage and say that Hong Kong needs to migrate away from its property fixation and that our property tycoon oligarchs (not the financial sector) along with outdated government laws and policies, have dangerously distorted economic development and how our economy allocates capital.
After all, Yang was head of that black hole of taxpayer resources called Cyberport. It was an egregious excuse for a luxury residential development masquerading as a technology project. His position was best described as building maintenance rather than technology development. As he wandered through its empty hallways surely he must have marvelled at the monumental exploitation.
It showed that if you let Hong Kong’s property tycoons interpret technology (or the West Kowloon Art District) it invariably results in some sort of land transfer by the government and luxury flats. They have no problems investing a billion dollars in technology or art as long as they make hundreds of billions in a property deal. The relentless greed of our property tycoons is akin to a feast in a time of plague.
Fixing the city’s economic landscape is outside Yang’s remit. But he faces an uphill task because Hong Kong companies, both large conglomerates and small businesses, are far behind the developed world and other Asian countries in research and development. Little idea generation or intellect is needed for pouring concrete and collecting rent.
But by attacking the financial sector he fails to understand what troubles innovation and entrepreneurship in Hong Kong. He should be laying down a process for bureaucrats to interact with every incubator and early stage investment group to understand what is realistic for Hong Kong’s circumstances. He has to overcome his academic inclination to side with other academics, few of whom have actually started or run businesses.
The financial sector isn’t crowding out hi- or low-tech entrepreneurs in Hong Kong. It is a major source of high-paying jobs and opportunities for graduates in a city where traditional manufacturers and many multinationals have relocated to mainland China. And if Hong Kong expects to play any role in emerging financial technologies it will need to work closely with banks and bankers, who are needed to understand the process and its requirements. If anyone is going to innovate payment systems or blockchain they are going to need the help of the financial sector.
In their formative years, start-ups don’t create much employment. The risk of failure is high. And even tax incentives won’t help because tech start-ups usually make losses in their early days.
There’s little reason to believe that a top-down government bureau can “improve our ecosystem” or “change our mindset” by choosing winners. No governments have succeeded at the business of technology. The formation of the Innovation and Technology Bureau faced political opposition because nobody understood why it should exist and what value it could possibly add to Hong Kong’s almost irreversible set of industrial and business obstacles.
Peter Guy is a financial writer and former international banker