Hong Kong must focus on innovation and science to maintain its edge over economic rivals
Ken Chu says its core values and a free, open market still set Hong Kong’s economy apart despite some challenges, but continued success in the digital age will depend on its ability to innovate and upgrade
Hong Kong has been named the world’s most competitive economy by the IMD Business School in Switzerland for the second straight year. The title is indicative of our strong fundamentals due to our core values and, together with “one country, two systems”, this sets Hong Kong apart from its rivals.
Therefore, we must safeguard and uphold our core values for continued economic success.
Given its small economy and market size, Hong Kong does not enjoy the economies of scale like mainland China. Relatively high wages mean Hong Kong does not have the advantage of competing on cost.
But, as Financial Secretary Paul Chan Mo-po noted shortly after the IMD rankings were announced, we do have a solid legal framework and rule of law that international investors feel comfortable with, an efficient administrative system, and sound banking, financial and transport infrastructure. Above all, we have an open and free market.
We must strive to maintain the cosmopolitan nature and openness of our market for Hong Kong to play the role of a super connector, for the mainland as well as the world at large. Only then will Hong Kong be able to maintain its long-term competitiveness. Competitiveness could mean high productivity, the capacity to produce more units with a given set of raw materials than rivals; it could mean efficiency, or producing at the lowest cost; it could also mean having what competitors do not.
Management guru Peter Drucker believes that, in the 21st century, knowledge-worker productivity is the real competitive advantage. That seems logical, in view of the new economy sweeping the globe. Economies everywhere need more knowledge-based workers, such as programmers, system analysts, animation artists, product designers, and so on. The more productive they are, the more competitive the new digital age economy is. If we agree, we should train workers with high technical expertise, and scientific and technological knowledge.
Harvard professor Michael Porter says competitiveness hinges on the capacity of industry to innovate and upgrade. This could be another way to maintain our competitiveness. However, we seem to have problems in innovation and science.
Hong Kong continues to slip down the Global Innovation Index rankings. Moreover, the Programme for International Student Assessment (Pisa), says Hong Kong’s performance has dropped significantly in science. Our STEM (science, technology, engineering and maths) curriculum must be strengthened to make future generations tech-savvy, or Hong Kong will lose out.
Fortunately, we still have a distinct edge over competitors – our strategic location. Being next to innovation hub Shenzhen and within the Guangdong-Hong Kong-Macau Greater Bay Area lets us tap a rich pool of technological talents and innovation resources.
Setting up a tech park at the Lok Ma Chau Loop and boosting financial aid to innovation start-ups represent the right way to spur technological advances.
Yet, there are challenges that undermine our competitiveness – high living costs, exorbitant rents, escalating labour costs, damage to our natural landscape and a widening wealth gap, highlighted by the latest Gini coefficient index.
After all, a city needs not only “hardware”, such as infrastructure, financial systems and innovation parks, to boost its competitiveness, but also people to drive economic growth and energise innovation. If talented people find it isn’t worth working and living in the city, they will eventually abandon it.
Dr Ken Chu is group chairman and CEO of the Mission Hills Group and a National Committee member of the Chinese People’s Political Consultative Conference