26 October 2016
Hong Kong needs to focus more on facilities like Cyberport to nurture technology businesses. Photo: HKEJ
Hong Kong needs to focus more on facilities like Cyberport to nurture technology businesses. Photo: HKEJ

Hong Kong must step up support for the tech sector

Hong Kong has established the Innovation and Technology Bureau in a bid to bolster technology and innovation development.

The IT workforce in the city has jumped nearly four-fold from 3,000 two decades ago, according to a survey from the Vocational Training Council. However, the talent availability for jobs such as program development has been falling while IT managerial jobs have been stagnant over the years.

IT jobs in Hong Kong are mostly sales, support and after-sales service positions, as product development positions have been contracting over last one or two decades. Simply speaking, Hong Kong’s IT industry focuses more on technical support rather than technology innovation.

The city’s economic structure is one of the underlying reasons. Hong Kong relies heavily on property, finance and retail sectors which require only technical support services from the industry. As a result, the IT sector has lagged behind in development of high-end technology products.

Local universities have been trying to nurture talents for the industry. However, secondary school students have very limited interest in either IT or electronic engineering.

Secondary students who apply for these programs had relatively lower scores in the Hong Kong Diploma of Secondary Education Examination since the 2000 dotcom bubble.

Why has Hong Kong made little progress in developing the IT industry? Let’s take a look at some places where the IT industry has flourished — Israel and Singapore.

Many of Israel’s industries are closely tied to its national defense. The Jewish state’s internal and external security work involves national interests. Hence, the country finds it necessary to promote the high-tech sector.

Its modern national defense industry involves high-technology such as communication, electronics, materials and auto control technology. As technologies are sought to be upgraded continuously, talents have been nurtured, resulting in a huge pool of skilled professionals.

Also, military enterprises usually have a long supply chain, including upstream and downstream technology and products supply. That creates a spillover effect. Some of the talents might quit their jobs and start up their own companies.

Meanwhile, technology talents in other sectors might be inspired to become entrepreneurs themselves. They have much more experience and knowledge than young graduates.

A “visible hand”, or government support, is a key element for nurturing hi-tech companies.

Park Chung-hee, who led South Korea from 1961 to 1979, had hammered out preferential policies for large tech companies. That has helped create a number of tech giants like Samsung and LG.

Singapore is even smaller than Hong Kong. However, the city state has managed to become a leading player in recycling used water, thanks to government incentives.

Favorable government policies are essential for development of hi-tech industry.

Authorities should provide some protection for the sector in the early stage before it can stand on its own feet. The government needs to take care of the interests of various stakeholders.

This article appeared in the Hong Kong Economic Journal on Dec. 15.

Translation by Julie Zhu

[Chinese version中文版]

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Chair Professor of Information Systems, Business Statistics and Operations Management at HKUST

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