Flaws in Hong Kong’s approach to innovation apparent in Mil Mill row

The government has its sights set on developing more glamorous, hi-tech sectors, but it must think carefully about Hong Kong’s place in an already established supply chain
Moreover, neglecting home-grown innovation and industries does not send the best message

John Hanzhang Ye

Published: 6:15am, 22 Oct, 2022

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The possible closure of Mil Mill, the only drinks carton recycler in Hong Kong, raises questions about the government’s commitment to its environmental goals and its support for green technology innovation.

Both the Environmental Protection Department and Mil Mill’s landlord, the Hong Kong Science and Technology Parks Corporation, say they have done their best to accommodate the needs of the recycler, even though its current site is to be set aside for other industries. The episode reveals a lack of long-term vision for the city’s technological development.

Speaking at an event organised by the Stem Education Alliance on September 26, Chief Executive John Lee Ka-chiu once again stressed the government’s determination to transform the city into a technology hub.

The new policy address has its own section on technological innovation. The government’s goal is ambitious. It aims to attract at least 100 innovation and technology companies to set up or expand their operations in Hong Kong in the next five years. But there seems to be less support for home-grown innovation.

Moreover, the government prefers to set its sights on sectors like biotechnology and electronics. One can see the appeal: these involve cutting-edge technologies that are expected to boost economic growth. Moreover, they conjure up images of shiny laboratories with fancy equipment and computers. By contrast, recycling is an industry associated with low-skilled work and low growth. It doesn’t fit the government’s vision of the city’s future.

Chief Executive John Lee Ka-chiu (centre left) poses for a photo with other guests at the launch of a new Stem initiative at Pui Kiu Middle School in North Point on September 26. Photo: Xiaomei Chen

Yet even if the government prefers to develop a hi-tech electronics industry, there are still two problems. First, has it thought about where Hong Kong should position itself in the supply chain? We are no longer in the 1980s, when the industry was in its infancy and companies in the United States were beginning to outsource some of their production overseas.

At that time, Taiwan seized the opportunity to invest in building its capacity in the design and production of integrated circuits. In the meantime, manufacturing was moved to places with low labour costs like China and Southeast Asia. Now, that supply chain is more or less consolidated. Hong Kong may not find it easy to find a place in it.

There is a chance that a new, China-led supply chain may emerge, offering Hong Kong fresh opportunities, but still, we need to clarify our position in the grand plan of China’s electronic industry.

The headquarters of China’s Semiconductor Manufacturing International Corporation in Shanghai. Photo: Bloomberg

The second problem is that Hong Kong relies too heavily on free market thinking. Again, this might work for a young market and when no political intervention is involved. But that is not the case here.

The electronics industry requires a huge amount of investment and coordination between design and production. For a free market model to work, Hong Kong needs to be able to attract investment. Given the economic and political obstacles the city is facing, the laissez faire approach will not work as the government hopes it will.

But beyond these concerns, the lack of attention being paid to home-grown industrial innovation sends the wrong message to local companies. The government plans to open a large-scale pulping facility in Tuen Mun in 2025, which it says will be able to process all locally collected drinks cartons. Yet there is no reason to abandon what we have already built.

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The treatment of Mil Mill reflects Hong Kong’s attitude to non-finance or non-computer technological innovation. It sets a precedent that may discourage businesses from investing in other types of technology, even though they may hold greater opportunities for Hong Kong than specialised technologies that are already being developed elsewhere.

Innovation is more than an economic calculation. It requires more than land leases, tax cuts and attracting talent from overseas. It requires long-term commitment. To create a foundation for sustainable innovation, the city needs to focus on what it already has, and offer support and scope for development in those areas.

Building this kind of friendly environment is what will attract outside talent. As the government forges ahead with its ambitions to transform Hong Kong into an international tech hub, it must remember that only by nurturing and capitalising on the skills and spirit of Hongkongers can the capacity for innovation be sustained in the long term.

John Hanzhang Ye is a PhD student in science and technology history at the University of Minnesota, Twin Cities and also holds an MPhil degree in sociology from the Chinese University of Hong Kong

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