Hong Kong firms call for flexibility in tech fund to keep ahead of mainland rivals

Hong Kong risks lagging behind the mainland in technological development unless a key subsidy and tax allowance programme becomes more flexible, according to some Hong Kong-owned businesses based in Guangdong.

They called on Chief Executive Leung Chun-ying to ease restrictions under the Guangdong-Hong Kong Technology Co-operation Funding Scheme (TCFS), which was established by governments on both sides of the border.

"The Hong Kong government has asked companies to upgrade themselves, and the Hong Kong Productivity Council has helped enterprises upgrade and transform [into more advanced production methods]," said Li Weirong, a director of the Dongguan-based alloy manufacturer Dongguan Eontec.

"But we have found it very difficult to co-operate with them. For example, in some projects, the Hong Kong government subsidised 49 per cent of the cost, while we commit the remaining 51 per cent … But when we need to use the money we committed, we have to ask for the ITC's [Innovation and Technology Commission's] permission. So it is very inefficient."

Li claimed they had applied for the TCFS before, but Hong Kong's ITC, which administers the programme, said they could not find any record.

An ITC spokesman emphasised that "to ensure proper use of public money ... the funds disbursed have to be managed by the lead applicant" of the TCFS, which is usually a local research institution.

The TCFS was jointly set up by the Guangdong and Hong Kong governments in 2004. Its purpose is to promote research collaboration, especially between Guangdong businesses and Hong Kong institutions. So far, it has supported 177 projects with total funding of over HK$680 million.

Li said incoming president Xi Jinping's recent visit to Guangdong showed China supported technological innovation. To avoid falling behind Guangdong, the Hong Kong government should review its industrial policies as soon as possible, he said.

Li's colleague Freeman Tse Sin-hang, an Eontec director, echoed that view. "We have to ask whether we are giving up on industries and focusing on financial services alone," Tse said. The company depended largely on government support to transform itself from making cookware to producing alloys.

By contrast, the Guangzhou-based Hong Kong firm TWS, which makes rechargeable battery packs, got started by relying largely on its own resources. TWS' founder, Raymond Leung Cheong-ming, built his research team by attracting experts from foreign companies and co-operating with Hong Kong universities. "We have applied for funding schemes in Hong Kong," Leung said. "But I think the government can help by encouraging more talented people to work on the mainland."