SCED's speech at 22nd APEC Small and Medium Enterprises Ministerial Meeting in Iloilo City (English only)
Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the 22nd Asia-Pacific Economic Cooperation (APEC) Small and Medium Enterprises (SMEs) Ministerial Meeting in Iloilo City, the Philippines, today (September 25):
Good morning Mr Chairman, ministers, ladies and gentlemen.
First of all, Hong Kong, China, would like to join others in thanking the Philippines and the city of Iloilo for the warm hospitality and excellent arrangements for this Ministerial Meeting.
Resilient SMEs are the foundation of economic stability and growth. Resilience, by definition, is the capacity to adjust to and deal with change.
"Now-ism" is a term being discussed quite often lately in many economies, and it is a prevailing phenomenon that we see in Hong Kong. What is it? "Now-ism" indicates a trend that consumers are increasingly expecting instant information, communications and gratification. SMEs that are versatile compete to be "now-ists", that is, enterprises that make things happen fast.
Speed to market has always been a critical challenge for SMEs, and now, with communication getting ever faster with the Internet, and also with increased globalisation and rapid changes in technology like affordable 3-D printing, it has become much easier for SMEs to go with this "now-ism" approach. It is much faster (like next day) and cheaper (a fraction of the former cost) to roll out prototypes. And if the prototype works, a product will be soft-launched immediately to maximise market share. It's about being the first to deploy. And if the prototype doesn't work, they will scrap the design and try another one quickly. It's about failing fast and trying again.
I would like to share with you our experience of how it affects our innovative SMEs. You probably know already that Hong Kong's neighbour city Shenzhen, together with the Pearl River Delta region, offers a manufacturing ecosystem unmatched anywhere else in the world, with clusters of symbiotic factories turning the area into a one-stop shop for many innovative projects. What you may not know is that Hong Kong is a big part of this ecosystem, because our SMEs and entrepreneurs are involved in many of these factories.
Indeed, many "now-ist" SMEs chose to set up their bases in Hong Kong because they can get the best of both worlds: the capacity and readiness to produce and the security to operate in an environment that has access to financing, is business-friendly, and is very well connected to the rest of the world. I will give you a concrete example. The Internet of Things (IoT) is a big hit globally. Studies show that there will be 50 billion devices connected to the Internet by 2020. The unique characteristic of this IoT revolution is the fact that these smart devices need to be physically manufactured, unlike most of the Internet or mobile revolution in recent memory. Given its geographic proximity and connectivity to a huge manufacturing capacity, Hong Kong is ideally and strategically positioned to be a driving force in this IoT revolution. Innovative SMEs can grow quickly and scale up leveraging on Hong Kong's business-friendly policies, access to financing, sophisticated infrastructure, and a robust IP (intellectual property) protection regime.
Perhaps let us hear from the industry directly why they selected Hong Kong.
These entrepreneurs actually came from India, Germany and the US, developing IoT products like a stylish wearable that enables musicians to synchronise on a feelable pulse. One of them developed a smart headphone with a built-in music player that learns from your listening habits and intelligently curates playlists based on your personal preferences. These are but a few of the recent examples of SMEs around the world starting their operations in Hong Kong, reinforcing the ABAC (APEC Business Advisory Council) Chair's message this morning to strengthen partnerships among innovation systems.
How do we support the growth of this new wave of "now-ist" SMEs? Hong Kong, China, provides different types of initiatives especially designed to help SMEs. We have our microfinance schemes and innovation and technology funds that provide seed funding all the way to venture matching funds; we have initiatives that help their products reach the markets effectively, such as export marketing funds, export credit insurance and a wide spectrum of trade promotion programmes; and we also have incubation programmes and co-working spaces tailor-made for our "now-ist" SMEs, offering affordable rental spaces as well as technical and funding support that help them succeed quickly.
We have entered into a new era of industrial innovation. There is literally no time to wait. Things must happen now.
In closing, I would echo a quote from the movie "Top Gun" which is felt by today's innovative SMEs: "I feel the need ... the need for speed."
We, the policymakers, must be proactive and help our SMEs adapt to this changing landscape and stay ahead of the competitive curve.
Thank you very much.
Ends/Friday, September 25, 2015