The South China Morning Post
This week is Hong Kong FinTech Week. It will undoubtedly be hailed as another step towards realising the city’s vision of becoming an “international innovation hub”, as described in Chief Executive Carrie Lam Cheng Yuet-ngor’s policy address. Yet, if Hong Kong is to realise this ambition, it must look beyond finance. Lam also spoke about diversifying the economy, and entrepreneurs must embrace business models that are internationally relevant and serve the needs of the masses beyond our borders.
But are Hong Kong entrepreneurs ready to do the hard work to understand what the wider world is really like, and could they start by just looking at the region?
Local entrepreneurs will surely continue to create new ways of helping us do things faster and more effortlessly – apps for yet another food delivery service come to mind. But geographic location is Hong Kong’s strategic differentiator – immediate access to mainland China, and direct connections to both Asean and the Indian subcontinent. This must be leveraged, alongside our ultra-efficient business environment, legal system and strong institutions.
Hongkongers need to get their hands dirty in the streets of this vast region. That is where opportunities beckon. They need greater awareness, curiosity and resilience, exploring places beyond the popular holiday destinations of Japan, Taiwan, Phuket and Bali. Top of the list might be Manila, Surabaya, Chennai and second- and third-tier cities in mainland China, like Lanzhou or Wuhan. Too often seen as dirty frontier land, dangerous or even backward, these places are where the action is. All entrepreneurs should note that Jack Ma did not innovate in a state-sponsored incubator. He innovated because he had a view of a China borne out of experience.
Innovation in these regions means something very different because lifestyles and socio-economic development status are completely unlike ours in Hong Kong. Scalable innovations will be more closely related to providing and improving things we take for granted, like access to clean water, adequate housing, health care and transport solutions for mobility in congested cities.
Singapore, for example, has capitalised on infrastructure needs in Vietnam by exporting its water treatment technologies. More than 30 biomedical companies use Singapore as a regional hub, investing in clinical research.
Hong Kong currently invests a meagre 0.7 per cent of its GDP in R&D, compared to 2.2 per cent in Singapore, 4.7 per cent for Israel and 3 per cent in Hangzhou. R&D expenditure will double, the chief executive said. This will include a new innovation and technology park in cooperation with Shenzhen, unsurprising given that, in 2018, Shenzhen’s economy (US$349 billion) is expected for the first time to surpass Hong Kong’s (US$347 billion), according to the Economist Intelligence Unit. The Hong Kong-Asean Free Trade Agreement will be signed in November. And let us not forget the opportunities associated with the “Belt and Road Initiative”, the scale of which many are only beginning to appreciate. Yet Hong Kong will miss these historic opportunities if it does not promote deeper understanding of the region. Here are a few places to start.
First, fund hands-on learning projects in developing regions resulting in tangible outcomes to get in touch with issues on the ground. This will offer an invaluable chance to work with local entrepreneurs, regulators and customers, and may even yield promising partnerships.
Second, commit to applying “smart city technologies” for regional megacities. While Hong Kong can be a testing ground to some degree, the realities of urban infrastructure and the challenges faced in places like Delhi, Yangon and Jakarta are vastly different.
Third, expand education on regional cultures, including their history and language, so young people will better understand the large emerging markets on our doorstep. This will stimulate an awareness that our advanced economy is the exception and most of the world does not live like us. Hong Kong should better leverage its ethnically diverse communities. Living among us are more than 150,000 Indonesians, 180,000 Filipinos, 9,000 Thais and 80,000 South Asians. How many young entrepreneurs in Hong Kong have even been to the towns and villages of the domestic helpers who helped raise them?
Finally, here is a big idea: invest in a regional innovation hub for Asean that will drive the development of technologies and applications for the region. Scientists and researchers from the region could be invited, breaking from the fixation on elite Western institutions, recognising there is talent here more closely linked to issues that matter. This could perhaps be in Yangon, which sits at the approximate centre of a circle encompassing 600 million people within a 1,000km radius. It would be a fraction of the cost of Hong Kong.
Most Hong Kong students look to the US or Europe. Most entrepreneurs seek inspiration from advanced economies in the West. But now is the time to realise that the most valuable lessons and opportunities are right under our noses in this region.