27 October 2016
Jack Ma's Alibaba epitomizes the business model of "Internet+". Hong Kong is unlikely to develop its own platform to rival the mainland e-commerce giant because of its market size. Photo: HKEJ
Jack Ma's Alibaba epitomizes the business model of "Internet+". Hong Kong is unlikely to develop its own platform to rival the mainland e-commerce giant because of its market size. Photo: HKEJ

Opportunities for Hong Kong in the age of “Internet+”

In recent years the mainland has been putting a lot of effort into developing “Internet+”, which refers to a system in which the internet acts as a main platform for business activities.

One of the best-known examples of “Internet+” is Alibaba. Due to our population and market size, it is almost impossible for Hong Kong to develop its own e-commerce platform that can compete with market leaders on the mainland like Alibaba, unless such platform is made exclusive to particular users.

“Smart City” belongs to this type of exclusive platforms, because every city has its own unique characteristics and limitations, and therefore a mode that applies to one city doesn’t necessarily apply to another.

On the other hand, it requires a lot of capital and resources to develop and run an online “Smart City” platform in the early stages in order to attract more users and fulfill its potential.

The key to success is to provide more incentives for people to use such platforms and incorporate them into their daily lives.

For example, if all Hong Kong citizens are allowed to use 5G service for free, I am sure the number of users of this latest high-speed telecommunication technology will shoot up instantly. 

The increase in the number of users means more business opportunities, which will then generate new ideas and innovations.

Free 5G service is also likely to inspire more innovative applications of the O2O (online to offline) technology, such as Uber, Airbnb and GoGoVan.

In contrast, “+Internet”, or “Business+Internet”, is a different concept. It refers to an operating model in which the internet is used to enhance or supplement business activities.

Cloud services and “Big Data” are typical examples of “+Internet”. The emergence of “Big Data” has revolutionized traditional business concepts, and in the age of the “Big Data”, data itself is often seen as a more valuable commodity than the hard product.

Take “Ubike” in Taipei as an example. Citizens or tourists can hire a bicycle with the Easy Card (Taiwan’s equivalent of the “Octopus Card”). All they need to do is to download the official app, which will tell them where and when they can get a bicycle, and how to return it.

In other words, the Ubike platform is basically a massive online database of information about who hired bicycles, when and where they did so, throughout the year.

From the “Big Data” perspective, the value of these data goes far beyond just as a reference for pricing. By analyzing them, the city government can not only understand the spending patterns of consumers, but can also formulate its environmental protection and urban enhancement programs based on these data.

According to media reports, Netflix will enter the Hong Kong market soon. Netflix in fact is a very typical “Big Data” enterprise, since its operator not only keeps abreast of changing customer tastes but also creates new demand by analyzing the spending patterns of its customers.

In short, there is no shortage of new opportunities in the age of “Internet+” for Hong Kong. All it takes to capitalize on this new tech boom is a change of mindset.

This article appeared in the Hong Kong Economic Journal on Sept. 24.

Translation by Alan Lee

[Chinese version 中文版]

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Professor, Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong

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