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Hong Kong: A Rising Innovation Hub
Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

Hong Kong Science and Technology Park is home to more than 1,700 companies, with incubation programmes that provide financial support for technology and business development.

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

Cyberport recently launched a Digital Transformation Support Pilot Programme (DTSPP) to help SMEs adopt digital solutions.

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

At the Google Cloud Summit 2024 held in June, over 1,000 product advances were showcased, including cloud-connected AI-powered agents that can help companies accelerate their digital transformation.

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

Offering videography and photography services, Hong Kong start-up KaChick Ai Ltd uses AI face-finder technology and offers an AI-powered photo hub.

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

Tech start-up Sport-a-tous aims to build a “sporty” smart city infrastructure by promoting digital inclusion and embracing AI to strengthen social bonds.

Hong Kong: A Rising Innovation Hub <br/>香港:新興創新樞紐

The Hong Kong Applied Science and Technology Research Institute (ASTRI) has a wide range of IPs and service offerings that can be tailored to the needs of SMEs and start-ups, such as Generative AI, cybersecurity and ESG solutions.

Amid the global race for talent and cutting-edge technology, Hong Kong is ambitiously pursuing its mission to become a regional innovation and technology (I&T) hub. With the sector designated as a key engine of growth, the Government is working to build a robust ecosystem by enhancing I&T infrastructure, research capacity and attracting talent.

 In 2022, the authorities announced the Innovation and Technology Development Blueprint for Hong Kong's I&T development over the next decade. The sector formed a major component of Financial Secretary Paul Chan’s Budget 2024-25 with $24 billion allocated to drive the tech economy. 

Hong Kong, together with Guangzhou and Shenzhen, was ranked second in the world in terms of performance in the Global Innovation Index 2023. Hong Kong’s start-up ecosystem is flourishing, too. In 2023, the number of start-ups grew by 7% to more than 4,200, with a workforce of over 16,000 people, according to data from the Hong Kong Trade Development Council. Expenditure on R&D has nearly doubled from a decade ago.

Hong Kong Science and Technology Park (HKSTP), which is home to more than 1,700 technology companies and over 14,000 R&D practitioners, has been adopting a multi-pronged approach to boost the I&T ecosystem. This includes providing all-round support to start-ups, encouraging angel investors and venture capital funds to step up investment, and promoting technology transfer and commercialization of R&D results.

“HKSTP’s incubation programmes offer financial support for technology and business development, as well as mentor support and investor matching,” said Timothy Tam, Associate Director, CEO Office, HKSTP. “Outstanding start-ups and companies emerging from these programmes are supported with the Acceleration Programme through market promotion, business expansion and enterprise development.” 

Under its first Startup Booster Programme, five high-potential Hong Kong companies have been selected for training and business development in Silicon Valley.

Cyberport, which boasts over 2,000 start-ups and tech firms, is nurturing digital start‑ups and entrepreneurs through a series of incubation programmes, offering up to $1.1 million in funding support and two years of rent-free workspace, as well as a $400 million investment fund (CMF).

“Our recently launched Digital Transformation Support Pilot Programme (DTSPP) is designed to help SMEs adopt digital solutions,” said Eric Chan, Chief Public Mission Officer of Cyberport. “A maximum subsidy of $50,000 is provided to F&B and retail SMEs to facilitate the adoption of readily available solutions, helping them reduce cost, capture business and increase efficiency. Applications for solution providers and SME applications in digital payment and shopfront sales, online promotion, customer management and loyalty solutions are now open.”

Last year, Cyberport recorded a total of 446 start-ups landing at the campus, a 20% year-on-year increase. Notably, 17% of them were from Mainland and overseas enterprises, underscoring Hong Kong’s growing appeal among global tech entrepreneurs. 

According to the latest Economic Impact Report from Access Partnership, Hong Kong businesses will be able to harness an economic benefit of $287.4 billion in 2030 if AI-powered products and solutions are adopted.

Michael Yue, Managing Director and General Manager, Google Hong Kong, said through its tentpole Smarter Digital City initiative, the company organized a series of activities to support SMEs and start-ups in embracing digital technologies. “For example, the recent Google Cloud Summit 2024 showcased over 1,000 product advances, including a series of cloud-connected AI-powered agents that will help accelerate every organization's ability to digitally transform,” he explained.

Google Hong Kong has partnered with Cyberport and HKSTP on initiatives such as the “Igniting Startups & FinTechs Program” and the “Rocketing AI Co-incubation Program,” providing Google Cloud Credits and all-rounded training and technical support to AI-first start-ups, as well as Google Cloud’s program for the Web3 start-ups. Google's AI powered products such as Chat with Gemini also help SMEs boost their productivity.

For start-ups and SMEs that lack resources, acquiring patented technologies is a shortcut to expediting business development. Since its inception in 2000, the Hong Kong Applied Science and Technology Research Institute (ASTRI) has been granted over 1,100 patents, and has transferred more than 1,500 technologies to the industry through research contracts, technology licensing, etc.

“We have a wide range of IPs and service offerings that can be tailored to their needs, such as Generative AI, cybersecurity and ESG solutions, mixed language speech recognition and audio indexing, and many more,” explained Dr Denis Yip, CEO, ASTRI. “Technology transfers will allow start-ups and SMEs to leverage ASTRI’s IPs and expertise at a lower cost with greater flexibility, enabling them to quickly reposition and adjust in response to market and economic changes.”

Elsa Wong, Chairman of HKGCC’s Innovation, Data and Communication (IDC) Committee, said it was vital to improve the reputation and standard of the I&T industry for it to be recognized worldwide. “This would result in more globally recognized and reputable enterprises being established here,” she explained. “Furthermore, the reward package must be competitive at different stages of employment and levels. The third factor is ensuring that the environment is conducive to talent growth, continuous learning, competition and contribution.”

Hong Kong start-up KaChick Ai Ltd employs AI face-finder technology and offers photography, videography and an AI-powered photo hub that provides hyper-personalized recommendations. A Cyberport incubatee, the company won the Cathay Pacific Ignition Project in 2019. Its long-term goal is to provide clients with a KaChick Photo Pass, enabling access to professional photography services anywhere and anytime. 

Co-founder Larry Lam believes Hong Kong has what it takes to become an innovation hub but said there were two main challenges to overcome. “Hiring talented individuals remains competitive and costly, especially as Gen Z and younger workers increasingly prefer a ‘slasher’ lifestyle with multiple income streams. Second, effectively marketing our products and expanding beyond Hong Kong's borders are significant hurdles. These challenges require strategic planning and innovative solutions to ensure growth and success.”

Tech start-up Sport-a-tous, founded in 2022, offers a multi-purpose sports platform with the aim to build a “sporty” smart city infrastructure by promoting digital inclusion, leveraging the digital economy (green economy), and embracing AI to strengthen social bonds. “We recently launched our first raft of services focused on Corporate Employee Wellness,” revealed Co-founder and CEO David Li. “We are planning to progressively launch other services using an organic growth strategy, starting with Hong Kong as a test market before eventually rolling out globally.”

Li believes the Government should allow more start-ups to experiment with smaller-scale trials of its services and initiatives. Incentivizing established businesses to partner with start-ups would also help to create a more supportive and accessible ecosystem.


Addressing the Talent Shortage

While the city’s I&T ecosystem and R&D scene are competitive, the manpower shortage is hindering growth. HKSTP’s Tam said concerted efforts by the public and private sectors were needed to further inspire confidence in overseas talent. 

“Furthermore, an imbalance still exists between the abundance of business development, sales and marketing roles compared to a relative lack of R&D and technical positions in some sectors. This perceived and actual lack of opportunities hinders Hong Kong's ability to attract talent with diverse skill sets and expertise,” he said.

The Government’s Technology Talent Admission Scheme provides a fast-track arrangement for eligible companies to admit young Mainland Chinese and overseas tech talent to undertake R&D work in the city. Government data last year showed that over 100 mainland professionals moved to Hong Kong under the scheme, making up 87% of all such admissions.

While commending the Government’s aims to enlarge the I&T talent pool and create strong impetus for growth, ASTRI’s Yip pointed out that high living and housing costs may deter potential talent from relocating. “That’s why we have spent significant efforts in creating an inclusive and supportive working environment for our staff members who may come from different places around the world,” he explained.

To further expand the tech talent pool, Cyberport collaborates with leading tech companies, business organizations and academic institutions to offer technology and entrepreneurship-focused activities and training programs. It is also accelerating the construction of the AI Supercomputing Centre, strategic infrastructure expected to attract overseas and Mainland talents and companies.

Besides attracting talent, Hong Kong also needs to digitally upskill its workforce, which Google is addressing through Initiatives like AI-focused Cloud Skills Boost and Google Career Certificates. “Google Cloud has also deepened its collaboration with the Vocational Training Council (VTC)’s member institution, the Hong Kong Institute of Information Technology, to equip the next generation with knowledge of generative AI, further strengthening Hong Kong's talent pipeline,” said Yue.


Acquiring Funding, Embracing Technology

Capital is a major issue for start-ups trying to get off the ground, as well as SMEs that want to embrace e-commerce and technology for their businesses.

Travel Club Hong Kong is a start-up that engages with VIP customers through exclusive events and citywide merchant offers. A Mastercard merchant services partner since 2017, it has partnered with over 50 well-known brands and more than 1,000 outlets in the city.  The company hopes to become the leading platform for cross-border travel and event experiences across the Greater Bay Area (GBA), Greater China and the Asia-Pacific region.  

Director Dennis Shi said securing affordable funding has become increasingly difficult due to rising interest rates and a more cautious investment environment. “Investors are more risk-averse, making it harder for start-ups to attract investment,” Shi explained, adding that firms also had to pay competitive salaries to attract and retain talent, further straining budgets.

Even with the Government funding up to 75% of the costs, SMEs and start-ups still had to stump up the rest, said SME Committee Chairman Angela Lee. “The very small size of the local market and, in relative terms, the cheap and convenient public transport on the one hand and expensive logistics costs for product delivery on the other are often cited as hurdles for embracing e-commerce. When there are no compelling reasons to change and incur upfront costs, SMEs do not lightly make a move in a new and relatively unknown direction.” 

IDC Committee Chairman Wong said another challenge was how SMEs viewed adopting technology. “SMEs perceive changes as a complication more than a solution or advancement. People are accustomed to the processes they have been using. The ‘real value’ cannot be clearly visualized.” Companies also found it hard to integrate technology into their strategy and processes, she explained. Business owners might not understand how technology can support them, and they have a limited budget in acquiring hardware, software or services for integrating and managing technologies.


Greater Bay Area: The Bigger Picture

The rise of GBA cities like Shenzhen is seen as a complementary force boosting the region’s I&T landscape. A collaboration between the Hong Kong and Shenzhen governments, the Hong Kong-Shenzhen Innovation and Technology Park is touted to become the city’s largest I&T centre. It has formed partnerships with around 60 world-class enterprises, academia and research institutes from the Mainland, Hong Kong and around the world.

A collaborative dynamic can drive greater technological advancements and economic growth for the entire Greater Bay Area, benefiting all stakeholders involved, said ASTRI’s Yip, who revealed that the research institute opened a new office in Shenzhen earlier this year.

According to Google’s recent “Smarter Digital City – Rocketing to new heights: Accelerating the development of Hong Kong’s start-up ecosystem” report, 86% of start-ups are planning to expand overseas in three years with a particular interest in the GBA (29%) and Southeast Asia (28%). 

HKSTP’s Tam said Hong Kong's unique advantages in fundraising and data flows presented strategic opportunities within the GBA’s competitive landscape. Also, by focusing on high-value, small-batch advanced manufacturing, Hong Kong can complement the mass manufacturing strengths of other GBA cities, fostering a collaborative approach to I&T development.


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