Hong Kong lures innovators as Asia-Pacific tech hub

A recent HK$500 million (US$64 million) donation by a Hong Kong tycoon to the Hong Kong University of Science and Technology (HKUST) is symbolic of the collaboration between the private sector, public institutions and higher education that is driving tech development in the city.

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The donation, announced in August, will be used to establish an institute of synthetic biology, essentially a research platform for a field of science that combines biological and non-biological disciplines. Wei Shyy, HKUST’s president, called the gift “a vote of confidence to the future development of Hong Kong’s science and technology-based industry”.

The new institute will be a product of the synergy inherent in Hong Kong’s tech ecosystem, with government agencies, educational institutions and the private sector working with entrepreneurs and business leaders to drive innovation, equipping businesses with the funding and resources required to access China and expand across Asia.

Commercial Success

Launched in 1997, the Octopus card has become ubiquitous in Hong Kong with 99% of people aged 15-64 using them for everyday transactions.

One of the most successful tech firms in Hong Kong is Octopus Cards Limited, which launched its electronic payment system in 1997. Today, more than 36 million Octopus cards and products are in circulation, with 99% of people in the city aged 15 to 64 using them to travel, shop and dine. “Hong Kong is one of the few places in the world that attracts tech companies from both east and west,” says Sammy Kam, technical director of Octopus Cards. “It has excellent communications, financial and identity infrastructure.”

Mr Kam says the city is an ideal testing bed for innovations. “Hong Kong people are very receptive to new technologies and the city has one of the highest penetration rates of internet connections and smartphones. These factors have rendered it a perfect place as a research and development (R&D) centre.”

We act as a bridge between academics pursuing basic research and the industry applying those technologies. That ensures everyone benefits commercially and economically.

Hugh Chow
chief executive of Hong Kong Applied Science and Technology Research Institute (ASTRI)

Octopus aims to access Hong Kong’s deep well of R&D facilities and talent to develop the next generation of smart payment systems, and to explore issues such as customer onboarding with institutions such as the Hong Kong Applied Science and Technology Research Institute (ASTRI). “We act as a bridge between academics pursuing basic research and the industry applying those technologies,” says Hugh Chow, ASTRI’s chief executive. “That ensures everyone benefits commercially and economically.”

Location, location

It is not just established tech companies that are attracted to Hong Kong, the city hosts thousands of start-ups as well. “Hong Kong is globally renowned as an international city with highly knowledgeable local and overseas personnel, and a growing talent pool dedicated to R&D,” says Sebastien Codeville, chief executive of KaiOS Technologies, which makes advanced operating systems for low-cost mobile phones.

For KaiOS, one of Hong Kong’s advantages is its proximity to a pool of talent, suppliers and Asia-Pacific customers, with the city also serving as a gateway for overseas partners to China. “Having our headquarters in Hong Kong places us at the epicentre of the business and tech worlds,” says Mr Codeville, “Further, Hong Kong acts as the bridge between tech in Asia-Pacific and in the Guangdong-Hong Kong-Macao Greater Bay Area [GBA], which provides us with limitless opportunities to integrate with institutions in the future.”

Many Hong Kong start-ups have been highly profitable and expanded to other markets. Examples include logistics companies GoGoVan and Lalamove. The city’s tech community is complex, however, and more than simply a place to test and develop new business ideas.

Albert Wong, chief executive officer of Hong Kong Science and Technology Parks Corporation (HKSTP).

Albert Wong, chief executive officer of Hong Kong Science and Technology Parks Corporation (HKSTP), says, “If you are developing a biomedical innovation, a new medical device or diagnostics, or artificial intelligence, you would definitely consider Hong Kong because you are supported by a lot of universities with strong research capabilities, and you are near a large market with strong infrastructure and rule of law.”

Mr Chow at ASTRI points out that Hong Kong’s high-density urban areas are ideal for testing out smart city technologies. “The GBA, on the other hand, has a strong focus on innovation and technology and offers not just a huge market of 71 million people for technology enterprises, but a highly efficient manufacturing base where R&D outcomes can be turned into prototypes and products,” he says.

The vitality of cross-boundary collaboration is evident at Shanghai Xiaoi Robot Technology Company, better known as Xiao-i. “We value Hong Kong’s innovation potential and have collaborated with local partners and research institutes to increase the recognition and output of Cantonese voice technology,” says Max Yuan, Xiao-i’s co-founder and chairman. “We established a joint laboratory with HKUST focusing on cognitive intelligence research.”

Official recognition

State of the art facilities like the Data Studio at Hong Kong Science Park allow businesses and developers to co-create new software and applications in safe and reliable environments.

Mr Yuan says Xiao-i’s success is partly due to the city’s administration. “We have received tremendous support from the HKSAR Government since we first established our R&D centre at Hong Kong Science Park in January 2017,” he says. “The Science Park offers state-of-the-art office, labs and other facilities. It is also a platform that connects us with public and private funding, talent and business partners.”

Xiao-i is also applying for a subsidy offered by Hong Kong’s SME Export Marketing Fund, which helps small and medium enterprises expand markets, opportunities and business networks.

One very important thing is we only admit companies that are committed to R&D.

Albert Wong
chief executive officer of Hong Kong Science and Technology Parks Corporation (HKSTP)

HKSTP is “an ecosystem of innovators”, says Mr Wong. “We have a community of 13,000 people working for 770 companies in four million square feet.” The key, he adds, is R&D. “One very important thing is we only admit companies that are committed to R&D,” Mr Wong says. “At least 50% of their workforce must be engaged in R&D activities, and we ensure the tech companies and start-ups get the support they need for commercialisation of their R&D outputs.”

The government has been eager to support R&D in Hong Kong, funding research clusters in healthcare, and in AI and robotics. Other government programmes to encourage tech include the Enterprise Support Scheme under the Innovation and Technology Fund. By the end of January, more than 500 projects related to biotech – from stem-cell therapy and molecular diagnostics to traditional Chinese medicine and biopharmaceutical manufacturing – had been approved by the fund, receiving about US$130 million.

Working together

Collaboration is a vital part of Hong Kong’s success, as illustrated by the availability of facilities at HKSTP. “We have communal labs. If you’re a biomedical, electronics or data start-up, you can share all the expensive equipment,” says Mr Wong. “You don’t have to buy microscopes or chromatography equipment because we provide that for you. Large companies like Siemens and Arrow Electronics have set up their open labs in Science Park to support the R&D work on smart city innovation, providing high-end electronic equipment and facilities to develop next-generation and innovative engineering concepts and designs.”

Such collaboration extends not only across disciplines and borders but also across sectors. Giving start-ups and technology companies the right commercial and marketing support at the right moment is crucial for their continued growth, be it in R&D, business guidance and planning, go-to-market strategies or funding. “We need to innovate together,” says Raymund Chao, Asia-Pacific chairman of PwC.

Government agencies, established companies and professional services firms should come together to develop Hong Kong as a centre for investing and nurturing innovation.

Raymund Chao
Asia-Pacific chairman of PwC

PwC has signed a two-year fundraising programme with HKSTP that aims to build leading tech companies, expand the investor community and attract quality companies to the city. “Government agencies, established companies and professional services firms should come together to develop Hong Kong as a centre for investing and nurturing innovation,” Mr Chao says. “We want to work with tech companies to co-create solutions that will build a robust innovation and technology ecosystem in Hong Kong.”