Summary of views expressed at the First Meeting of the Current Term of the Commission on Strategic Development held on 16 March 2015 at 2:30 p.m.
Summary of Views Expressed by Individual Members
Building of an ecosystem for innovation and technology development
Innovation and technology development was a mindset issue. The key to building an ecosystem for innovation and technology was to build a public- private partnership mindset and approach. This should not only be a government initiative, but a collective initiative by the whole society.
To enhance and rationalize the existing ecosystem for innovation and technology in Hong Kong, we should capitalize on what we were good at and what we had done, and connect the dots, i.e. our pockets of excellence. The Government should take the lead to enhance connectivity by linking up the various stakeholders of innovation and technology, i.e. the Government, industries, services, academia, and research sector.
The Government should facilitate the creation of an environment where investors, entrepreneurs and academia could mingle and share ideas. This kind of environment would be conducive to the generation of innovative ideas.
The Government should encourage the building of incubators similar to Innovation Works in Beijing, which was founded by Dr LEE Kai-fu, former head of Google China.
The Key Performance Indicator (KPI) approach for the funding of incubation and innovation centres was suggested. The centres could be hosted by Hong Kong Science Park or Cyberport, but they should be run by the private sector.
The Shenzhen Government had proactively worked towards the creation of an ecosystem for innovation and technology in Shenzhen. For example, Shenzhen had collaborated with top universities of the Mainland and overseas, as well as major universities of Hong Kong, in research and development (R&D) projects. A venture capital industry and a design industry had also been established in Shenzhen to leverage on the latter’s strengths and help create an ecosystem. Hong Kong had the dots, but those
- 1 - dots had not yet been connected to create an ecosystem. To create such a system, the Government should consider the following:
- Hong Kong had to make good use of the research capabilities of its universities. - The Government should also make efforts to better align the missions of the University Grants Committee (UGC) and the Innovation and Technology Commission (ITC), so that university policies would encourage young professors to put more efforts into R&D. - When considering applications under the Innovation and Technology Fund (ITF), the Government should be more willing to support new ideas although these ideas might not seem to be applicable in the near future.
Taiwan started to support innovation and technology development in the 1980s. The critical factors of success identified included human capital, integrated industry and branding. The experience of Taiwan had good reference value for Hong Kong.
Hong Kong needed its own manufacturing industries to support its innovation and technology development. The Government should take bold initiatives to create favourable conditions for the development of manufacturing industries and innovation and technology, for example, by providing land for such development through reclamation.
Different types of innovation
In addition to technology innovation, other types of innovation included product innovation, supply chain innovation, process innovation and business model innovation. Business model innovation could create a lot of value. Many of the most successful companies in the Mainland today, such as Alibaba and Tencent, were innovative in business model.
Commercialization of R&D results
Commercialization of R&D results was very important. Society would give more support to innovation and technology policies if people could actually see the returns of R&D.
As indicated by successful overseas models such as the cluster of high-tech corporations of the Silicon Valley, the demand-led model was the key to successful commercialization of R&D results. To make the demand-led
- 2 - model work, there had to be collaboration of all stakeholders, i.e. Government, industry, academia and research sectors.
Under the demand-led approach, the business sector had to participate, starting from an early stage, in the whole process of identifying research projects which had business potential and developing these projects into marketable products or services. During this process, the business sector had to collaborate closely with the research sector.
Challenges faced by Hong Kong
Innovation was an attitude, and passion, confidence and market were elements affecting this attitude. Given that Hong Kong’s economy had focussed a lot on property development and finance in recent years, young people generally did not have diversified career opportunities. Many young people were under pressure from their parents when making their career choice. High property prices also added to the pressure. Due to these reasons, many young people of Hong Kong lacked passion and confidence in pursuing a career in innovation and technology.
Hong Kong’s business sector tended to look at strategies and profits from a short-term rather than long-term perspective. This mindset did not encourage investment in innovation and technology.
The existence of the minimum critical mass was important. Hong Kong’s local market for innovation and technology products was small. Mainland and overseas markets were also competitive. Market development was particularly difficult for small companies which had not yet established themselves in the local market.
In developing a new product, R&D might constitute only a small percentage of the cost while a high percentage was the cost of securing intellectual property rights and the requisite legal procedures. Such procedures were often time-consuming and resulted in high risk for companies.
Hong Kong’s society had a culture of critique, starting from parents, teachers and schools, to the media and politicians. This kind of culture did not encourage innovation.
Many innovations were stimulated by the idea of “fun”, which had not been a strong element in Hong Kong’s culture. Hong Kong should learn from the experience of other countries in this regard.
- 3 - Collaboration with the Mainland and leveraging the Mainland market
Hong Kong’s entrepreneurs should grasp the opportunities brought about by the Central Government’s policies in encouraging innovation and entrepreneurs, and leverage the Mainland market for quick scaling up.
There was tremendous potential for building exponential organizations in the Mainland market, i.e. companies which were able to grow rapidly in an exponential manner in a short period of time. Hong Kong’s entrepreneurs should learn from exponential organizations in the Mainland, examples of which included Xiaomi Inc. and JD.Com.
The Central Government adopted policies which encouraged innovation and entrepreneurship. It was proposed that the Central Government could consider initiatives to help Hong Kong’s young people go along with the momentum of “mass entrepreneurship and mass innovation” (大眾創業、萬 眾創新) in the Mainland. The proposed initiatives were as follows:
- To allocate more of the Central Government’s research grants and funds to Hong Kong, as Hong Kong had good universities and world-class research professionals. It was hoped that this would help Hong Kong’s gross domestic expenditure on R&D (GERD) as a ratio to GDP increase from the current level of about 0.7% to about 2% in three years. - To encourage various entities including provincial governments, municipal governments, universities, private enterprises, state-owned enterprises and investment organizations to introduce incubation centres to Hong Kong and bring to Hong Kong their relevant experience. - To include Hong Kong’s universities in “Challenger Cup” (挑戰者杯), a national innovation and technology competition among university students in the Mainland. - To encourage Hong Kong’s private sector to invest in innovation and technology and support young entrepreneurship in the field.
Hong Kong’s research sector should seek to collaborate with top universities of the Mainland, for example, Tsinghua University.
Hong Kong had many world-class academics and researchers who had the ability to lead Hong Kong’s innovation and technology development. However, due to the lack of manufacturing industry in Hong Kong, many research results could not be commercialized. It was suggested that Hong Kong should seek collaboration with Guangdong, which had a large manufacturing base. Combining the research infrastructure of Guangdong
- 4 - and the research capabilities of Hong Kong to conduct joint research projects would be beneficial to both places. Some of the research results, for example, those in biotechnology and IT, could be further developed in incubation centres in Hong Kong Science Park. Other research results, for examples, those related to heavy industries such as the automobile industry, could be further developed for application in Guangdong. The Government should review its policies, such as research grants policies, to remove institutional barriers and encourage collaboration between Hong Kong and the Mainland in R&D.
Nurturing and attracting talent
Nurturing of talent in innovation and technology should start from primary and secondary education. More elements on innovation should be included in the curriculum. More activities to encourage innovation should be organized for students. For example, young inventor programmes could be organized to encourage students to aspire to become inventors. For students who had shown interest and talent in innovation in secondary schools, it was important to encourage them to continue to pursue their studies in innovation and technology in university.
For university students who wanted to conduct specific research projects, consideration should be given to allowing them to have one extra year to conduct their projects.
Innovation included not only science and engineering, but also other fields such as design. The nurturing of talent should cover all fields of innovation and technology.
Learning from other countries, the business sector of Hong Kong should consider organizing innovation and technology competitions and offering attractive prizes so as to encourage local innovations and inventions.
Parents should be encouraged to adopt a more positive attitude towards young people’s career aspirations in innovation and technology.
Due to the lack of industries and job opportunities in Hong Kong, many talent of the innovation and technology sector chose to pursue their careers in other countries. It was important to find ways to retain talent in Hong Kong.
The Government should help our young innovators and designers’ work reach the world market, for example, by helping them participate in international trade fairs.
- 5 - In addition to nurturing local talent, the Government should also formulate a policy on attracting suitable talent from outside Hong Kong.
Pooling of resources on selected areas
UGC’s Research Assessment Exercise (RAE) 2014 results provided information on where Hong Kong’s strengths were within the UGC sector. Information on Hong Kong’s areas of research expertise would facilitate the bottom-up approach of innovation and technology development. According to the RAE 2014 results, Hong Kong had many pockets of excellence, but they had not reached the critical mass required. Therefore, in developing innovation and technology, it was important for us to pool our resources together to focus on our areas of strengths.
To achieve breakthrough in Hong Kong’s innovation and technology development, various sectors of Hong Kong should have long-term vision and pool resources together to seek market-oriented opportunities for investments in R&D projects.
Government intervention would be required to achieve real progress in innovation and technology in Hong Kong. The Government had to choose industries, sectors and projects which had potential, and focussed its efforts to coordinate development of these industries, sectors and projects.
Possible areas for focal development
We should turn Hong Kong into a living laboratory. Suggested areas to focus on were digital, cloud computing, smart devices, mobile apps.
IT and the health industry could be two areas for focal development. In IT, it was suggested that emphasis could be put on the following: internet, especially mobile internet; big data; cloud computing; internet of things. With the ageing population, there would be an increasing demand for health services. Hong Kong had high quality hospitals, universities and medical schools, and was in a good position to provide high quality health services. Hong Kong could target at becoming a super-platform for the IT industry and the health industry for product and service providers as well as users from Hong Kong, the Mainland and overseas.
Given the Mainland’s concern about environmental protection, the environmental protection industry was a possible area for focal development.
- 6 - Biotechnology and the bio-medical sector were also possible areas for focal development.
To enhance the competitiveness of Hong Kong’s service industry, we should adopt innovation and technology to upgrade our services. The Government could provide support to facilitate this process.
Although the manufacturing plants of Hong Kong’s industries had moved to the Mainland, the entrepreneurs running these industries were still from Hong Kong. We could explore the use of innovation and technology in these industries.
The Government had previously been promoting six economic areas. In addition to innovation and technology, the other five industries were education services, medical services, testing and certification services, environmental industries, and cultural and creative industries. Innovation and technology could be used to support the development of these industries.
The Mainland was Hong Kong’s biggest market. Our R&D should focus on areas related to improving the way things were done in the Mainland.
Financial support for young entrepreneurs by the business sector
Hong Kong’s business leaders should be encouraged to provide financial support for young entrepreneurs and internship opportunities for young people in the innovation and technology field, just like what Mr Jack MA was doing in creating the Alibaba Hong Kong Young Entrepreneurs Foundation.
Financial support by the Government
The Government should make sure that appropriate measurement criteria were used when considering applications for funding under the ITF and measuring the performances of companies which had received funding support. When setting the measurement criteria, it was important to give some allowance for failures.
The Government should explore new sources of funding to support innovation and technology efforts. Examples of initiatives that could be explored included allowing tax deduction for corporate contribution to innovation and technology education, or setting aside a certain percentage of the Government's expenditure on infrastructure development as funds for innovation and technology development.
- 7 - Government’s use of local innovation and technology products
The Government should critically examine its procurement policies and consider introducing flexibility so as to encourage the use of R&D products and services of local enterprises. The use of products designed by local designers and inventors should also be encouraged.
The Government should explore the use of local innovation and technology products to facilitate the handling of social issues. For example, the Government could consider using innovative means to provide channels for the public to express their views on social issues, so as to enhance communication and interaction between the public and the Government.
Government organization to develop and coordinate innovation and technology policies and efforts
The proposal put forward by Prof Tien Chang-lin to former Chief Executive Mr Tung Chee-hwa, i.e. to set up a bureau responsible for innovation and technology, with the head of the bureau reporting directly to the Chief Executive, was a good recommendation.
The proposed Innovation and Technology Bureau should be set up as soon as possible.
Resolving social conflicts
Promoting innovation and entrepreneurship would enhance the career prospects of young people of Hong Kong and give them more opportunities for upward mobility, which would help resolve the current social conflicts of Hong Kong.
Summary of Views Expressed by The Honourable Mrs Fanny LAW FAN Chiu-fun, Chairperson of the Board of Directors of Hong Kong Science and Technology Parks Corporation
The Hon Mrs Fanny LAW informed members that last year Science Park completed two studies on Hong Kong’s innovation and technology ecosystem and the role of Science Park respectively. A key finding was that stakeholders in Hong Kong’s innovation and technology ecosystem were disjointed which hampered the impact of the work of individual institutions. To address the problem, Science Park positioned its mission as three “C”s, i.e. to connect, to collaborate, and to catalyse.
- 8 - Science Park had been more proactive in reaching out to universities, industries and investors to identify research projects with potential for commercialisation and in connecting partner companies to industrialists and investors, and in helping them to explore overseas and mainland markets.
Science Park also created platforms to encourage researchers, in particular among universities, to collaborate in areas of common interest, for example, robotics and stem cell research.
As regards cooperation with the mainland, Mrs LAW informed members that, to remove existing barriers which Hong Kong universities had encountered, she had proposed, in a recent session of the National People’s Congress (NPC), to create a CEPA on innovation and technology cooperation between Hong Kong and the Mainland.
The PRC State Council had published an action plan on intellectual property strategy which included a patent navigation plan (專利導航計劃) to provide advisory service for industries to help them upgrade. Hong Kong was well- positioned to provide such services, as Hong Kong had the required expertise in IP law and arbitration, and the rule of law.
It was not easy to get Hong Kong investors interested in innovation and technology projects, as there were alternative investments which were less risky and could generate faster and bigger profits. To encourage investment in innovation and technology, she suggested that the Government should share the risk with angel investors. In this regard, the Science Park had initiated a pilot project with a venture fund of $15 million to help start-ups.
Mrs LAW also suggested that the government should step up efforts to connect innovation projects to industries and investors, and facilitate more free flow of information among stakeholders.
To this end, Science Park would consider organizing grand challenges to attract talents to come up with innovative solutions to real-life problems and select the best among them for implementation. Such demand-led innovations would stand a better chance of success.
Summary of Views Expressed by The Honourable Nicholas W. YANG, Advisor to the Chief Executive on Innovation and Technology
“Innovation” and “technology” had different meanings. “Innovation” was abstract and more akin to a passion or an attitude. It needed to be attached to something. “Technology” was a more concrete and stand-alone concept.
- 9 - People had different ideas about whether technology was good, and in which direction technology should go.
Three key areas of work to enable Hong Kong to pick up and embrace innovation and technology were as follows:
- There should be better alignment of the fundamental elements. Efforts to align and agree on what should be done regarding ideas such as demand- led, public-private partnership, hardware, software, etc. would help create a sustainable ecosystem for innovation and technology in Hong Kong. - There should be more effective connection of Hong Kong’s strengths and better connection with the Mainland to capitalize on its huge market. Hong Kong also had to take risks and choose some areas in innovation and technology to focus its resources and efforts on. - We should set our eyes on the long-term time horizon with bold foresight in light of the volatile market and short innovation and technology cycles in modern times. We had to look at longer-term items, such as standards and platforms. Hong Kong should aim at utilizing the Mainland market to create global standards.
Summary of views expressed by the Commissioner for Innovation and Technology
The Hong Kong Science Park was our flagship technology infrastructure. It was currently accommodating about 500 companies. With the completion of Science Park Phase 3 in 2016, the gross floor area of Science Park would increase by about 50%, accommodating over 600 companies. Under the Office of the Government Chief Information Officer (OGCIO), there was also the Cyberport which was Hong Kong’s information and communications technology flagship.
The ITF run by ITC provided funding support to innovation and technology projects on the applied research side. The Research Grants Council (RGC) and the UGC provided funding support to basic research.
In recent years, Hong Kong’s GERD as a ratio to GDP was generally around 0.73%, which was low by world standard. Moreover, in 2013, the total expenditure on R&D in the private sector amounted to around 45% of GERD whereas the public sector was responsible for the remaining 55%. This contrasted significantly with the international ratio of which the share of private to public R&D expenditure was usually about 70:30. The main reason was that Hong Kong was a service-led economy with almost no manufacturing sector or a defence industry.
- 10 - Through the ITF, the Government hoped to lower the threshold for entering R&D and thus encourage private-sector investment.
ITC’s Public Sector Trial Scheme provided funding support for the production of prototypes/samples and conducting of trial schemes in the public sector to facilitate and promote realization and commercialization of R&D results under ITF projects.
In addition to providing technology infrastructure and offering financial and related support to the innovation and technology industry, the Government had also placed increasing emphasis on the nurturing of talent and the fostering of a vibrant culture in innovation and technology.
Hong Kong had a number of strengths which provided a favourable strategic environment for innovation and technology development. Hong Kong was at the gateway of the Mainland, and had a unique role as a super-connector between the Mainland and the rest of the world. Another area of strength was intellectual property protection.
ITC would continue its work to strengthen the linkages among stakeholders, including Government, industry, academia and research sectors in promoting innovation and technology development.
It was a great challenge to link up Hong Kong’s dots and build up the requisite critical mass in innovation and technology development. Possible difficulties included varied market profitability and reluctance of stakeholders to try new services and products. Successful promotion of innovation and technology in Hong Kong would require the concerted efforts of all parties.
Summary of Views Expressed by Chairman
In addition to helping to boost our economy, innovation and technology could also be used by the Government and the private sector to make life more comfortable, efficient and safe for all people of Hong Kong.
Two important issues that had to be addressed in promoting innovation and technology development were:
- We had to identify a few areas where Hong Kong was competitive and had advantages in, on which our efforts on innovation and technology development should be focused. - We had to identify the roles of the Government. For example, we had to identify in what ways the Government should work with the industries,
- 11 - the academia and the research sector in promoting innovation and technology so that Government’s initiatives would have positive response and good results in the private sector.
Hong Kong had the talent and capital for innovation and technology development. However, we had not achieved as much as we had hoped. We had to look into how to encourage the business sector to be more interested in picking up innovative ideas and technologies and developing them into marketable products or services which had demand in the local market and/or international market. For example, we could explore whether tax incentives or land policies would help achieve this purpose. We had to make the link between innovative ideas and designs, and commercial products developed from those ideas and designs.
The meeting was adjourned at 5:00 p.m.
The attendance list is at Annex.
Secretariat to the Commission on Strategic Development April 2015
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Annex
First Meeting of the Current Term of the Commission on Strategic Development 16 March 2015
出席人士 Attendance List
主席 : Chairman :
The Chief Executive 行政長官
當然委員 : Ex-officio Members :
Financial Secretary 財政司司長 Head, Central Policy Unit 中央政策組首席顧問
非官方委員 : Non-Official Members :
The Hon Sir AKERS-JONES, David, GBM, JP 鍾逸傑爵士, GBM, JP Ir. BLAKE, Ronald James, GBS, JP 詹伯樂先生, GBS, JP Mr BROOKE, Charles Nicholas, SBS, JP 蒲祿祺先生, SBS, JP The Hon CHAN Han-pan, JP 陳恒鑌議員, JP The Hon CHAN Kin-por, BBS, JP 陳健波議員, BBS, JP Mr CHENG Wai-sun, Edward, SBS, JP 鄭維新先生, SBS, JP The Hon Sir CHOW Chung-kong, JP 周松崗爵士, JP Mr FANG Fang 方方先生 Mr FUNG Siu-por, Lawrence, GBS 馮紹波先生, GBS Mr KWOK Ching-kwong, Francis 郭正光先生 Mr LAU Ming-wai, BBS, JP 劉鳴煒先生, BBS, JP Ir Prof LEE Chack-fan, GBS, JP 李焯芬教授, GBS, JP Dr The Hon LEE Kok-long, Joseph, SBS, JP, PhD, RN 李國麟議員, SBS, JP, PhD, RN Mr LI Tzar-kuoi, Victor 李澤鉅先生
- 1 -
Prof LI Zexiang 李澤湘教授 Mr LIE-A-CHEONG Tai-chong, David, SBS, JP 李大壯先生, SBS, JP Mr LUI Yin-tat, David 雷賢達先生 Mr NG Wing-ka, Jimmy 吳永嘉先生 Dr TSE Cho-che, Edward 謝祖墀博士 Dr TSE Hung-hing, JP 謝鴻興醫生, JP The Hon WOO Kwong-ching, Peter, GBM, GBS, JP 吳光正先生, GBM, GBS, JP
政策局代表 : Representatives from Bureau :
Miss WONG Wing-chen, Janet, JP 創新科技署署長 Commissioner for Innovation and Technology 王榮珍女士, JP M r WONG Chung-yan, Johann, JP 創新科技署 副署長 Deputy Commissioner for Innovation and 黃宗殷先生 Technology
Professor YUE On-ching 創新科技署科學顧問 Science Advisor, Innovation and Technology 余安正教授 Commission
列席人士 : In Attendance :
Mrs LAW FAN Chiu-fun, Fanny, GBS, JP 香港科技園公司董事局主席 Chairman of the Board of Directors of the Hong 羅范椒芬女士, GBS, JP Kong Science and Technology Parks Corporation
Mr Nicholas W Yang 行政長官創新及科技顧問 Advisor to the Chief Executive on Innovation and 楊偉雄先生 Technology Mr CHAN Mo-po Paul, MH, JP 發展局局長 Secretary for Development 陳茂波先生, MH, JP
- 2 -
因事未能出席 Apologies
當然委員 : Ex-officio Member :
Chief Secretary for Administration 政務司司長
非官方委員 : Non-Official Members :
Prof CHENG Kai-ming, SBS, JP 程介明教授, SBS, JP The Hon FANG Kang, Vincent, SBS, JP 方剛議員, SBS, JP The Hon Mrs IP LAU Suk-yee, Regina, GBS, JP 葉劉淑儀議員, GBS, JP Dr LAW Chi-kwong, GBS, JP 羅致光博士, GBS, JP Mr NIGHTINGALE, Anthony John Liddell, SBS, JP 黎定基先生, SBS, JP The Hon SHEK Lai-him, Abraham, GBS, JP 石禮謙議員, GBS, JP Dr SMITH, Peter Cookson 施倍德博士 Mr WONG Kwok, Kingsley, JP 黃國先生, JP Ms YANG Mun-tak, Marjorie, GBS, JP 楊敏德女士, GBS, JP Ms YIP Yok-tak, Amy, BBS 葉約德女士, BBS Prof YU Cheung-hoi, Albert 于常海教授
- 3 -