Hard to be optimistic about Hong Kong innovation and technology bureau
The opportunity for Hong Kong to play a role in China’s technological development has long passed
I am trying to be hopeful and optimistic about Hong Kong’s new innovation and technology bureau, but besides appearing more than 20 years too late to make a difference, the opportunity for Hong Kong to play a role in China’s technological development has long passed.
How the bureau’s leader, Nicholas Yang Wei-hsiung, uses its budget of HK$25 million for start-up funding and operating costs of HK$36.5 million to staff the bureau will largely determine its success. Too many academics with no real business experience in commercialising technology and bringing ideas to market will render it ineffective as a public policy maker and seed investor.
Too many of the usual government bureaucrats will kill innovation because they are far too risk averse and not inventive. Just look at how government bureaucrats struggle with implementing legislation for Uber and crowdfunding platforms for the city. And including too many elite local businesspeople from conglomerates and property developers will stifle change.
Mainland Chinese have demonstrated that a keen understanding of their local markets is needed to develop successful e-commerce and internet platforms. Hong Kong investors and companies had their chance in 1998 to play a big role in China’s e-commerce development when Jack Ma Yun shopped for investment around Hong Kong for Alibaba. Hong Kong isn’t an important player in China’s technology industry.
At its best the bureau can show Hong Kong as being more than a cabal of asset speculators
Hong Kong’s public policy for technology is starting to emerge if you read Yang’s recent remarks after he led a 50-strong delegation to the mainland. It sounds like another bland and dismal copy of Hong Kong’s subservient attitude of seeking Beijing’s approval in areas where Hong Kong needs to carve out its own independent role. It is void of any originality and understanding of how to achieve competitive advantage in the global technology industry.
Yang says: “It’s hard for the mainland to find a connection point with Hong Kong when there are technology issues that could benefit the city.” Yang added that many business opportunities for Hong Kong would arise from the central government’s “Internet Plus” strategy and its “Made in China 2025” plan. One example was “cooperation between startups in Hong Kong and the mainland and talent exchanges”.
The “Made in China 2025” plan aims to create a manufacturing revolution underpinned by smart technology. “Internet Plus” was launched by Premier Li Keqiang in March to encourage internet startups and new technology in traditional sectors. Hong Kong has lost its manufacturing sector and has far fewer traditional business sectors than the mainland’s economy. So how Hong Kong can make a difference to China taxes the imagination.
Yang is almost unintelligible in articulating a Hong Kong strategy because there is nothing to describe which makes any sense. The mainland’s tech industries don’t have to connect with Hong Kong for anything – not for funding, knowledge, management talent, international marketing and domestic customers.
“There are quite a lot of projects in the pipeline on the mainland,” said Yang. “We should bring Hong Kong’s industry players to the mainland for exchanges and to seek business opportunities.”
Hong Kong’s leaders once again fall into their obsequious role of playing a servant to China’s industry rather than finding its own sustainable source of innovation. That service approach works for financial services because Hong Kong offers a world class stock exchange, which China needs.
If you want to become a tech leader you don’t seek cooperation. You seek to destroy your competition and mercilessly dominate a market – just like Alibaba drove eBay out of town and seized and shaped China’s e-commerce.
Governments have usually demonstrated a poor record for picking technology winners. Arguably, the only products from research to final application successfully funded by a government are the atomic bomb and landing on the moon.
To develop sound public policy Yang needs to listen to successful technologists with a track record in startups. And the latter are people who come from diverse backgrounds. Some are college drop outs pursuing fringe ideas in the basement of their mother’s house.
Hong Kong’s entrepreneurs and its economy, for better or worse, have always managed to find their balance, the right kind of business for the times. Each generation has spawned its own business heroes based on the opportunities available rather than contrived support.
At its best the bureau can show Hong Kong as being more than a cabal of asset speculators. At its worst, it will soon reveal itself to be an ill conceived, belated body that is trying to serve China in an area where Hong Kong has fallen too far behind.
Peter Guy is a financial writer and former international banker
