Speeches and Presentations

Speech by SCED at HK Innovation and Technology Summit

Following is the keynote speech by the Secretary for Commerce and Economic Development, Mrs Rita Lau, at the Hong Kong Innovation and Technology Summit in San Jose, USA, today (June 4, San Jose time) (English only):

Ladies and gentlemen,

Good morning. I am delighted to have this opportunity to talk to you on my all-time favourite topic: Hong Kong. It is a particular pleasure for me to do so before such a distinguished audience. The fact that you have chosen to join us here suggests that you are interested to hear what Hong Kong has to offer in terms of the development of innovation and technology, in particular what we have to offer in terms of accessing the vast opportunities in China.

To paraphrase the title of my talk today: you are all in the right place at the right time to get an update on how Asia's World City is adapting technology to ride on a wave of innovation that is sweeping China and the world.

Some people have said that the rise of the Chinese economy in the 21st century is reminiscent of that of the US itself a century ago. And among all the attributes that could make China a major economic power, it was said that there is one that it shares absolutely with the United States: ambition. I want to share with you our ambition to become the innovation and technology hub for China.

There is an emerging consensus that innovation and technological development are increasingly important to the enhancement and growth of economies around the world. Hong Kong, as a predominantly service-oriented economy, has long recognised this fact. Since its establishment in 1997, the Government of the Hong Kong Special Administrative Region has been a keen advocate for the development of Hong Kong into a regional technology services hub. The vision is that Hong Kong will develop into an innovation-led, technology-intensive economy in the 21st century, serving the region not only as a business centre, but also as a centre for the development and commercialisation of innovative ideas and technology.

Of course, most of you are aware that, while Hong Kong is an integral part of China, it operates as a Special Administrative Region under the "One Country, Two Systems" concept.

Hong Kong has an impressive list of attributes, in terms of its physical infrastructure, open and free market policies, free flow of information and capital, low tax rate, and of course a sound legal system including a good regime for intellectual property protection. These set us apart from other cities in China. These attributes allow Hong Kong companies and international companies based in the territory to operate under an international business environment, with a level playing field, having the benefit of a fully convertible currency and working to international accounting standards.

Our GDP per capita, which was at US$30,840 in 2008, is among the highest in the world. Indeed, Hong Kong has been ranked as the world's freest economy by the US Heritage Foundation for 15 consecutive years, and we have just been ranked as the second most competitive economy in the world, right after the US, by the International Institute for Management Development.

The universities in Hong Kong are among the very best in the Asia-Pacific, if not the world, for their outstanding teaching and research achievements. In an Asian university ranking released just last month, universities from Hong Kong occupy the first, second and fourth positions of the top five Asian universities. In recent years, our universities have also formed extensive research collaboration networks with top research institutes in Mainland China, which enable us to leverage on the enormous scientific and technological resources there. This unique combination of first-class infrastructure and close links to institutions in China provides a base on which Hong Kong is rapidly becoming the preferred route through which international companies access the vast and growing China market.

Another unique advantage comes from our location. Hong Kong is situated at the heart of the Pearl River Delta region of southern China. This is one of the most economically active and fastest growing regions in the world. Indeed, this region alone accounts for over 10% of China's GDP and nearly 30% of its total exports. The Pearl River Delta region, with the support of Hong Kong's world-class logistic, financial, design and other professional services, is already one of the most important manufacturing centres in the world.

The closer and closer economic relationship between Hong Kong and the Mainland can also be demonstrated by the Closer Economic Partnership Arrangement, commonly known as CEPA, which is the free trade agreement operating between both Hong Kong and China. CEPA does not only allow tariff-free access to Mainland markets for Hong Kong-made products, but also enables companies to carry out high value manufacturing and processing in Hong Kong before the finished or semi-finished product is shipped to the Mainland, thus protecting intellectual property rights while enjoying tariff-free access to the Mainland market. The latest Supplement VI to CEPA, just signed last month, further broadens the scope of liberalisation of services and trade on the Mainland, with particular focus on banking and securities services. It is worth pointing out that the benefits under the CEPA agreements apply to all companies, regardless of their nationality, operating legitimately in Hong Kong, not just Hong Kong companies.

With these excellent intrinsic qualities, Hong Kong is definitely in a strong position to become a regional innovation and technology service hub. The Hong Kong Government attaches great importance to promoting applied research, and has put in place a comprehensive programme to make essential investments in the physical, human and technological infrastructure, to create a business environment conducive to innovation and technology development.

Let me turn now to the vexed question of funding support for industry. We first set up the Innovation and Technology Fund (ITF) in 1999. The ITF operates through a number of programmes aiming at fostering more innovation and technology activities, facilitating greater university-industry collaboration, encouraging small enterprises to pursue techno-preneurship and encouraging university graduates to pursue a career in research and development.

To date, the ITF has supported nearly 1,400 applied R&D projects carried out by universities, research institutes and various sectors of industry. Mr Eddy Chan, our Commissioner for Innovation and Technology, will give you more information about these programmes later, including the five R&D Centres set up to support technology development in Hong Kong while bringing benefits to all partners.

Operationally, these centres receive government recurrent funding. So I will leave the details to Mr Eddy Chan later on to give you a more comprehensive overall of what these R&D centres do and the funding support they received from the government.

The second part of our infrastructure support is the establishment of purpose-built premises to help cultivate an environment in which innovation and technology can thrive. They include notably the Hong Kong Science Park and Cyberport. These facilities provide a wide range of facilities from one-stop office and research space, to communal laboratory and support facilities. There is a particular emphasis on supporting start-up companies, to overcome the entry barriers into specific technology fields such as IC design and digital content development. These facilities also provide incubation programmes for technology start-ups to nurture their business skills, grow their markets and attract investors. There are now more than 250 overseas and local technology companies in the Science Park and some 60 IT companies in Cyberport.

As part of our efforts to position Hong Kong as an innovation centre for the region, we have also established a very close working relationship with China and other economies. As I have mentioned before, the economic development of Hong Kong is now closely related to the economic development of our nation. After 30 years of labour and resource intensive industrial development, China is now moving towards "autonomous innovation" and has ambitions in a wide range of technological advancements, ranging from environment and energy, to agriculture and aviation. Hong Kong has an active role to play in the Mainland's technological development.

Apart from arranging finance for Chinese technology and industrial enterprises, Hong Kong has been the window through which these companies have been able to tap into market and technology intelligence from the rest of the world. More recently, we have become a testing bed for its domestic technologies, for example we recently introduced digital terrestrial TV broadcasting in Hong Kong using standards developed entirely in China for China. We are also a base for making use of facilities which cannot be accessed in the Mainland, and a natural partner for attracting investment from high-tech companies.

One recent example is DuPont's setting up of its Global Thin Film Photovoltaic Business and R&D Centre in Hong Kong. This centre, which opened in the Science Park this March, is the first-of-its-kind in the world. With this centre, DuPont brings in thin film photovoltaic technology to Hong Kong, and will further develop it in collaboration with our Nano and Advanced Materials Institute. The products developed in Hong Kong will then be mass produced in Du Pont's manufacturing plant in Shenzhen, making use of the latter's relative low land and other production costs.

In fact, the DuPont project is a flagship project under the "Shenzhen Hong Kong Innovation Circle", launched by the governments of the two cities in 2007 to promote strategic collaboration on sharing and utilising of science and technology resources for regional innovation activities. Several major overseas companies have already shown interest in this model. With the success of the DuPont project, we are confident that in the near future more and more such major companies will decide to step up their R&D presence in Hong Kong.

Ladies and gentlemen, I have only been able in the time available to give you an overview of our multi-pronged strategy to promote Hong Kong as a regional technology service hub. The key message I want you to take away with you is that Hong Kong is firmly committed to promoting innovation and technology. Looking into the future, we will continue to enhance our policies and their implementation to ensure that they remain effective in coping with the vast challenges brought about by changing circumstances.

I hope today's conference comes at the right time to give you a clear picture of what Hong Kong can offer to your company or organisation in terms of innovation and technology. Please take the opportunity that you will have today to find out more about what we have to offer. My colleagues and I will be delighted to answer your questions.

I would like to end with an observation. We undoubtedly live in difficult and challenging times. I am constantly reminded that every day seems to bring another danger, another crisis. I am mindful however that the Chinese character for "crisis" (危機) contains two elements - danger and opportunity. How we respond to crises depends on whether we fear the danger or seize the opportunities. I urge you all to seize the opportunities that Hong Kong has to offer.

Thank you.

Friday, June 5, 2009