Judge urges Hong Kong companies to boost investment to create innovative products and drive industry growth WITH INCREASED government support and involvement, Hong Kong's industrial sector is poised to develop at a faster pace. But local companies should try to step up further investment in research and development (R&D) to create innovative products and drive industry growth. Poon Chung-kwong, chairman of the final judging panel for the Hong Kong Awards for Industry, said major overseas companies such as those in the United States and Japan invested large sums of money in R&D every year and hired many staff in this division. Hong Kong industrial companies' investment in this respect lagged far behind their overseas counterparts as they were more concerned about maintaining their existing profit margins, Professor Poon said. 'Research and development is long-term investment and may take 10 years or so to get a fruitful result,' he said. Professor Poon said that as Hong Kong companies grew bigger over time and became financially stronger, he hoped they would invest more in R&D on their own or through partnerships to fuel business expansion. 'Without significant R&D investment, it is virtually impossible [for companies] to get any ground-breaking achievement,' he said. Hong Kong's industrial sector is adapting to worldwide market changes and competition, and placing increased emphasis on product design and development. Companies are switching from original equipment manufacturing to original design manufacturing operations, which means value-added services for overseas customers. The Hong Kong government has provided more assistance and support to the local industrial sector in recent years to enhance its competitiveness worldwide. In the past, the government took a more neutral stand and acted as a facilitator for the local industrial sector, focusing on providing an ideal investment and business environment and sound regulatory framework. Professor Poon said this was changing. The government set up the Applied Science and Technology Research Institute (Astri) to help push towards high value-added products. With government funding, Astri aims to provide midstream research and development capability to help increase the added-value and productivity of the industry. Professor Poon said Astri would facilitate the transfer of technology developed from its R&D projects to benefit the industrial sector. 'In effect, the government is investing in technology development for the industry,' he said. Industrial companies could acquire and turn innovative ideas or scientific research results developed by Astri into commercial products. Astri has five initial areas of focus - photonics technologies, wireless communications, internet applications, integrated circuit design and biotechnology. It aims to commercialise these technologies by transferring them to industry through licensing, joint ventures and company spin-offs. Most of Astri's top management are industrialists and entrepreneurs whose immense experience should help the development and transfer of technological innovations into commercial products. In addition to the long-term strategy of strengthening R&D efforts, Professor Poon, a former Astri board member, said industrial companies should pay attention to other business aspects including management and operation systems to increase competitiveness. Companies were required to conduct regular reviews on product design, investment strategies, R&D, resources applications and management systems to improve their operations, he said. Professor Poon, president of the Hong Kong Polytechnic University, said its Institute for Enterprise served as a 'company doctor' and provided business and management assessment services. He said it would carry out independent and comprehensive reviews for companies looking at all management and operation related aspects, and then make recommendations to increase competitiveness. Raising education levels of the next generation is also seen as a strategy to support the development of industry. Professor Poon said the government's investment in education was important because the higher education of young people in particular would contribute to the long-term growth of society.