Concrete Analysis | Lok Ma Chau Loop can boost HK’s technology credentials

The government’s recent announcement to redevelop the Lok Ma Chau Loop – a piece of swamp land adjacent to the Shenzhen river – into a technology park has stoked a range of emotions among the city’s business community and wider public.

Those against the plan point to Hong Kong’s puny investment into research and development (just 0.76 per cent of the city’s gross domestic product in 2015) and the city’s inability to foster the growth and development of a meaningful ecosystem over the past 20 years. They said that less than 3 per cent of employed persons work in the research and development sector. They also question whether a viable technology industry can exist in a city that sits right next door to Shenzhen, arguably one of Asia-Pacific’s largest and most successful technology hubs, and whether the location is too remote from the city’s central business district areas to be able to draw any meaningful industry interest.

For many global technology companies, Hong Kong has historically been viewed as a sales and marketing outpost given the relative small size of its market. Moreover, for companies that are able to operate in the mainland market, most already have significant operations in China. Microsoft, for example, has a number of offices scattered across China including the largest research and development facility outside of the United States in Beijing. And with market access getting harder not easier, it makes little sense for larger technology companies to expand operations in Hong Kong. In many instances, Singapore has been viewed as a more viable location to establish regional headquarters benefitting from the larger and more open markets of Southeast Asia.

So with this in mind, does Hong Kong really need another technology park? And, one that potentially may be four times the size of the existing Hong Kong Science Park, no less.

Hong Kong’s standing as a technology hub falls short of other global cities. Even within the region, cities such as Singapore, Shenzhen in China, Bengaluru in India and Hsinchu in Taiwan are often seen as being further down the road in terms of developed ecosystems. Still that does not mean we should not try to continue to support the growth of the industry in the city.