Speech by SCED at 5th Business of IP Asia Forum (English only)
Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the 5th Business of IP Asia Forum today (December 3):
Margaret (Executive Director of Hong Kong Trade Development Council), Mr (Changyu) Shen (Commissioner, State Intellectual Property Office, China), Mr (Francis) Gurry (Director General, World Intellectual Property Organization), Mr (Miguel Ángel) Margáin (Chair, Intellectual Property Rights Experts Group, Asia-Pacific Economic Cooperation), distinguished guests, ladies and gentlemen,
Good afternoon. It gives me great pleasure to join you all at this luncheon of the 5th Business of Intellectual Property (IP) Asia Forum.
Today we have a diverse audience from the international and local IP communities, including representatives from government and public bodies, top business executives, scholars, entrepreneurs, IP creators, IP users and IP intermediaries. Whatever background you come from, this Forum provides a dedicated and convenient platform for you to exchange views and explore opportunities in the business of IP.
To get started, let me borrow the words of Francis Bacon, a famous English thinker from the Golden Enlightenment Age. He said, "A wise man makes more opportunities than he finds." This rings true for IP, which creates so much value for the global economy.
Thanks to IP, we are able to enjoy innovative products and services, venture into new creative frontiers, and harness economic benefits that may be otherwise untapped. Let me share with you two examples.
Two years ago, Disney's animated film "Frozen" took the world by storm and raked in about US$1.3 billion at the global box office. I believe many kids and adults alike are still humming the "Let It Go" tune these days. "Frozen" went on to win two Academy Awards and became the top licensing theme for toys last year. The estimated retail sales of its licensed merchandise such as clothing, toys, stationeries, bedding and linen, reached US$1 billion in 2014. This is an impressive figure, and matches nicely with the worldwide box office receipts.
"Star Wars: The Force Awakens", the seventh installment of the eponymous movie franchise, will be released worldwide this month. A massive marketing campaign of the movie's merchandise was launched in September, three and a half months before the release of the movie. The campaign has harboured huge fan followings and attracted much media attention.
And to create more buzz, September 4 of 2015, the day on which the merchandise officially came onto the market, was dubbed "Force Friday". Merchandise sales in the US (United States) alone are expected to fetch US$1 billion, with the worldwide sales projection reaching US$5 billion for 2016.
These two examples are vivid proof showing how "IP transforms global business". They unlocked and exploited the creative contents of the movies, and successfully applied the IP generated to the commercial world for economic value.
Indeed, through different forms of trading of IP rights, notably licensing, IP rights owners can expand the boundaries of their innovations and creativities to explore uncharted territory. New geographic markets, re-imaginations in different media, crossovers of goods or services are all venturing possibilities. Licensees are able to upgrade their offerings, be it goods or services, and maintain a competitive edge through the use of good branding, creative content and new designs, and technology.
We have yet to have a home-grown international blockbuster on a similar scale of commercial success. But beware. "Monster Hunt", a local original animated film directed by Raman Hui, aka the "Father of Shrek", may be the next big thing heading in that direction.
"Monster Hunt" was released in Hong Kong and Mainland China in July 2015, and it is the reigning highest-grossing film in China to the tune of US$380 million. "Monster Hunt" has tremendous potential for IP exploitation and commercialisation. In fact, a crossover project between the movie characters and Ngong Ping 360, a world-class Hong Kong tourist destination, was launched in June of 2015. The crossover project was a great success in terms of promoting local tourism and creative talent.
"Monster Hunt" will be released in North America in early 2016. I encourage you all to explore the business opportunities that arise. I hope you will capitalise on its creative content and open up new revenue streams.
Aside from creative content, innovation also plays a significant role in harnessing the power of IP. In today's knowledge-based economy, companies are increasingly seeing IP as an important asset that should be valued, built, managed and leveraged strategically to drive innovation and growth.
Take Forbes' list of the world's 100 most valuable brands for example. The 2015 ranking shows that the top three positions are all technology-based and IP-intensive brands, with another three tech giants taking the fifth, seventh and 10th places.
And investment in innovation does lead to economic success. According to the Thomson Reuter report in 2015, the top 100 innovative companies outperformed the Morgan Stanley Capital International (MSCI) World Index in revenue by 6.01 per cent, employment by 4.09 per cent, and R&D spending by 1.86 per cent. Companies on the top 100 list represent the current vanguard in innovation. They harness the power of IP rights and commercial insight to bring an idea to life.
It is apparent that IP is the driver for continuing growth and it allows insightful companies to stay ahead of the game. Wise men, like you, as Francis Bacon suggested, may ask, "Where shall we make these IP opportunities?"
Well, how about right here in Asia. Of the top 100 innovative companies in the Thomson Reuter Report that I just mentioned, 44 of them hail from Asia. Indeed, Asia is rising as a converging point for IP activities, particularly in view of the unprecedented economic development in China in the past few decades. Among the world's IP5 Offices, three of them are from Asia, notably the State Intellectual Property Office (SIPO) of China. In terms of the number of IP filings, SIPO surpassed the other four IP offices in filings for patent, trade mark and designs, as reflected in the latest statistics released by the World Intellectual Property Office.
One reason attributing to China's intensive use of the IP system is the emergence of its middle class and the corresponding surge in spending power. The Credit Swiss Global Wealth Report 2015 pointed out that China's middle class, at 109 million, is now the world's largest, surpassing the United States'.
In another recent international research, it is forecast that "... 326 million new middle class will emerge in China's urban areas from 2014 to 2030. The total middle-class population will reach 854 million in China's urban areas ... The rise of China's middle class will help lift consumption share in GDP to around 50 per cent by 2030 from 36 per cent in 2014."
The research projected a fast increase in consumption of discretionary goods and services, with exponential growth likely to happen in sectors like automobiles, telecommunications, real estate, education, recreation and medicines and medical services.
So what impact may it have on the international IP landscape? The increasingly large and affluent Chinese middle class will create huge demand for high-end, and more sophisticated, products and services with greater IP content in the foreseeable future. This will present tremendous market potential in terms of trading of IP rights and provision of professional intermediary services for the world to harness.
China's "Belt-Road" initiative will further fuel IP trading throughout the Asian, European and African continents covered by the "Belt-Road" route. The "Belt-Road" initiative will generate overwhelming demand for high-level support services in the years to come.
Hong Kong has long served as the "super-connector" between Mainland China and the rest of the world not just for trade and investment, but also for ideas and innovations. We have rich experience and expertise in cross-border IP transactions and management. With our fundamentals as strong as ever, Hong Kong is well-positioned to be the IP trading hub in the region.
To forge ahead, I have chaired a working group since March 2013 to study the overall strategy to promote Hong Kong as an IP trading hub and devise specific measures in support. After two years of intensive work, the working group released a report in March 2015 with recommendations to further promote the development of IP trading in Hong Kong.
The Hong Kong SAR (Special Administrative Area) Government accepted the recommendations, and is working intensively with stakeholders on implementation. We are pressing ahead in four strategic areas.
First, we work hard to enhance our IP regime:
On copyright, we are pushing the Copyright (Amendment) Bill 2014 through the legislature and will bring it back to the full Council next week for the final reading and passage. This is a major milestone for protecting copyright in the digital environment. A communication right exclusive for owners, additional copyright exceptions for users and a safe harbour for online service providers will all fall into place.
On patents, the Patents (Amendment) Bill 2015 was introduced last month to provide the legal framework for establishing an "original grant" patent system in Hong Kong. This will enable applicants to file standard patent applications directly in Hong Kong without first obtaining a patent in a designated patent office elsewhere.
On trademarks, we have completed a public consultation on the proposed introduction of the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks to Hong Kong. We are carefully considering the views received and mapping out the best way forward to join the mainstream development.
Second, we support IP creation and exploitation:
Our Innovation and Technology Fund (ITF) has been investing in R&D activities and commercialisation of R&D results in both the private and public sectors. Earlier this year we injected an additional $5 billion into the ITF.
A major breakthrough worth mentioning is the establishment of the Innovation and Technology Bureau by the Hong Kong SAR Government just two weeks ago. The new institution got working in full swing in no time, taking stewardship of the long-term development of innovation and technology in Hong Kong.
Third, we foster IP intermediary services and manpower capacity:
Our Hong Kong Trade Development Council launched the Asia IP Exchange in 2013 to enhance Hong Kong's online IP trading capabilities and connections. It now showcases more than 25 000 tradable IP listings and connects with over 30 strategic partners locally, on the Mainland and overseas.
The Hong Kong SAR Government supports the development of IP valuation standards for first-mover use in Hong Kong. We are pleased to note that the Hong Kong Business Valuation Forum released in March 2015 a pioneering statement of standard on the reporting of IP valuation for its Registered Business Valuers to follow. In May 2015 the Royal Institution of Chartered Surveyors used Hong Kong as a launchpad to issue an IP valuation guidance note to clarify the legal, functional and economic characteristics of IP, and help establish industry-wide professional standards. IP professionals may make reference to such latest tools to facilitate IP commercialisation.
Fourth, we promote, educate and collaborate:
This Business of IP Asia Forum has grown in scale and stature since its inauguration in 2011. This year we have over 2 000 participants and 80 renowned speakers coming from around the globe.
Earlier this year, we signed Memoranda of Understanding respectively with the Korean Intellectual Property Office and the Mexican Institute of Industrial Property to enhance co-operation and promote IP commercialisation. We will continue to explore external collaboration opportunities with the international and regional IP communities.
The measures that I have mentioned are just highlights of the progress so far, and they underline our firm commitment to developing Hong Kong as a premier innovation and IP trading hub in the region.
I will leave you all with this quote: "There is beauty in the commonplace for those with eyes to see beyond." There are abundant IP opportunities around us. We are ready to help our businesses, intermediaries, and society as a whole to reap the full benefits of the IP age. Let us all work together in this "game-changer" to flourish and prosper.
Ends/Thursday, December 3, 2015