Hong Kong must seek out technology alliances

Winston Mok says Hong Kong should find ways to collaborate rather than compete with Asia's technology leaders if it wants to carve out a niche

PUBLISHED : Friday, 23 May, 2014, 3:15am
UPDATED : Friday, 23 May, 2014, 3:15am

While Hong Kong is a world financial centre, it is seldom associated with technology. In this, other Asian economies come more readily to mind.

Japan has been Asia's early leader in modernisation and, today, despite very high labour costs, it remains competitive. In Korea, technological innovation has long been the key ethos of success among many of its companies. Taiwan, meanwhile, maintains its position as the dominant player in notebook PCs, with the most developed value chain in IT-related industries across the strait.

A walk down what used to be the "Wall Street of the Far East" in Tianjin, where the buildings which once housed prominent international banks still stand, reminds us that a city's good fortunes can shift with changing circumstances. Shanghai is not the only mainland city vying to displace Hong Kong in some financial areas. Technology is an important foundation for most successful economies, and Hong Kong may want to carve out a niche in the related sectors. But without much of a hi-tech industry, it faces an uphill battle against some of its neighbours.

In the Global Innovation Index, Hong Kong is actually ranked the highest overall in Asia (7th), above Korea (18th) and Japan (22nd). But below the surface, the picture is less encouraging. Singapore leads the world in hi-tech and medium-high-tech output, while Hong Kong is 39th, and Singapore leads in hi-tech exports while Hong Kong is 41st.

Hong Kong is weak in knowledge creation (65th) versus the mainland (3rd) and Korea (4th).

Thus, Hong Kong should find ways to complement rather than compete head-on with other Asian technology powerhouses. A key strength is in technology alliances, and examples of potential collaboration include:

  • A partnership with Zhongguancun in Beijing. From its original location in Haidian district, the technology hub has grown to 16 locations throughout the city. Hong Kong could explore collaboration to form an "international window" here.
  • Linking up with Taiwanese manufacturers. While the headquarters for many Taiwanese technology companies are still in Taiwan, much of the manufacturing is done at the Pearl and Yangtze river deltas. Locating some of these headquarters in Hong Kong would facilitate better integration.
  • Asia's design hub. While Japan and Korea may be leaders in industrial design, they are somewhat insular. Hong Kong has a leading position in fashion, graphic and product design. Its cosmopolitan environment and free flow of information can attract designers from all over the world.

While currently not strong in knowledge creation, Hong Kong can be a hub for knowledge transfer, synthesis and funding. Hong Kong may not get there by sheer market forces. The government's "non-interventionist" approach has resulted in it lagging behind in innovation. To compete, the city needs a much more active science and technology policy.

Importantly, to be effective, it would need to be coordinated with counterparts in Beijing and Shenzhen - through win-win partnerships rather than in direct competition.

Winston Mok is a private investor, a former private equity investor and McKinsey consultant. An MIT alumnus, he studied under three Nobel laureates in economics