Opinion: Hong Kong’s tech companies need local status in China to succeed
Hong Kong’s companies are treated as foreign entities under Chinese investment laws, and that’s where Carrie Lam’s new administration must prioritise to change
Regina Ip Lau Suk-yee penned an excoriating opinion column in the South China Morning Post earlier this month declaring that Hong Kong is a “city in decline”. She said it might be too late to reverse Hong Kong’s inability to reinvent or evolve its economy.
Besides the malignant discordance of public discourse, which can occur in any civil society, she pointed out that Hong Kong’s misinterpretation and fixation on 50 years of “no change” in its political order and system of governance created an obsession with safeguarding its pre-1997 lifestyle, including the primacy of property development.
That obsession blinded Hong Kong’s leaders to the profound and systemic technological revolution taking place in the rest of the world, leaving the city creatively bankrupt.
I interviewed her about the same topic in February and she spoke with the same steely determination and unvarnished criticism about Hong Kong’s intellectual corruption and the banality of its response to competitive erosion.
Whether it is a result of successive government leaders’ inability to define or protect Hong Kong’s autonomy under the Basic Law or the inescapable gravity of mainland China’s economic expansion on all fronts, Hong Kong people look and feel like unaccomplished second-class citizens of China.
Now Ip is set to join the cabinet of Hong Kong’s incoming leader Carrie Lam Cheng Yuet-ngor, the woman she regularly criticised during her unsuccessful campaign for the chief executive’s job. Whether Ip’s support for change will be influential, rather than ephemeral dissent, remains to be seen. Change usually comes from an outsider or outside forces.
Grasping at economic transformation, innovation and invention is necessarily risky, expensive and frustrating. And academics who are trying to capture this elusive mix in Hong Kong have been sarcastically criticised in local media for wasting money on their attempts to “connect” ideas and create “ecosystems”.
It is further complicated by the phenomenon that some of today’s successful technology enterprises like Facebook, SnapChat or Microsoft Corp were created by university dropouts. Yet more anomalies and contradictions abound.
Mainland China’s internet is censored and Hong Kong’s is open. Yet mainland China leads Hong Kong in innovations such as e-commerce and financial technology.
Although it is important for society and educational institutions to have an uncensored internet, evidently in mainland China it is not absolutely necessary when it comes to building successful businesses from e-commerce to financial technology.
Tam Kar-yan, dean of the School of Business and Management at the Hong Kong University of Science and Technology, is not afraid to say that the campus is a platform for “encouraging thought – even radically inventive ideas”.
It is difficult to quantitatively measure the results of a technology ecosystem. But when I walked around HKUST’s modern campus, it was hard not to notice the international mix of the student body.
Social networking has emboldened them to reach out and engage anyone with a fresh viewpoint.
Tam explained that HKUST was founded 25 years ago with HK$300 million to HK$400 million (US$38 million to US$51 million) as a place to develop talent.
The public must realise the value of innovation. In the United States, there is a high level of anxiety for disintermediation that innovation brings or inflicts. And universities are the root for the formation of new technologies.
However, one of the city’s shortcomings is that a Hong Kong person or company cannot directly operate a technology venture in mainland China with the same legal rights as a Chinese national. Hong Kong’s permanent residents are treated as foreigners in mainland China under foreign investment laws.
Unfortunately, this disparity forces them to take the risk of taking on new joint-venture partners. Whether this is a priority for the new administration will determine if Hong Kong innovators can truly flourish in mainland China.
Peter Guy is a financial writer and former international banker