Famed Chinese Angel Investor Bob Xu Says Hong Kong Has Failed To Innovate

    Categories: Opinion

Hong Kong has failed in terms of innovation and technology development when compared with other countries in the region, including mainland China, Singapore and South Korea, famed Chinese angel investor Bob Xu said in a forum held in the special administrative region yesterday.

"In the financial services industry, I will give Hong Kong 100 (on a score of 0 to 100), but in terms of Internet and mobile Internet innovation, I would give (Hong Kong) a zero," Xu said when answering a question from China Money Network during a white paper release ceremony and a forum on Youth Innovation and Technology Entrepreneurship organized by the Hong Kong X-Tech Startup Platform at the Island Shangri-La hotel.

The white paper on the "Age of Intelligence" released yesterday provided answers to why Hong Kong has lagged behind other hot business locations. The Hong Kong government’s fiscal budget allocated to research and development was HK$18 billion (US$2.3 billion) in 2015, or 0.76% of its GDP. It is far behind Shenzhen and Singapore, whose R&D spending accounted for 3.5% and 1.7% of their GDP, respectively, according to the white paper issued by Hong Kong X Tech.

In 2015, venture capital and private equity firms invested HK$995 million (US$127 million) in Hong Kong’s start-ups, while that number for mainland China, Singapore and Japan reached HK$101 billion (US$13 billion), HK$7 billion (US$900 million) and HK$5 billion (US$640 million) respectively, according to the white paper.

Hong Kong also failed to attract international technology companies to establish research centers or to establish their headquarters in Asia in the island city. Microsoft Corp, Cisco Systems Inc., Amazon.com Inc., Apple Inc., and Google Inc. have all established their research centers in cities and countries such as Beijing, Shanghai, Singapore and Tokyo. For Chinese tech giants, Tencent, Huawei and Baidu have established presence in Singapore and India, but not in Hong Kong.

The white paper, which took almost one year to complete after consulting with experts, researchers and government officials, points out that Hong Kong is ideally positioned to catch up in the drive to become an innovation hub. The city should leap forward in the "smart city" era, fully taking advantage of its technology capacities in big data, artificial intelligence, financial technology, smart city and robotics.

"From autonomous driving to robotics and new energy vehicles, from smart logistics to smart wearables, each of the sector could be a huge market," Li Zexiang, co-founder of Hong Kong X Tech and a professor at Hong Kong University of Science and Technology, said during his speech at the ceremony. "What Hong Kong needs to figure out is how to utilize technologies to drive its innovation development."

Hong Kong has outstanding research capabilities in artificial intelligence. It has over 100 AI projects under development, covering sectors including deep learning, data mining, computer vision and speech recognition. Hong Kong’s universities and professors have helped the establishment of many AI start-ups in mainland China, including face recognition firm SenseTime and deep learning company Four Paradigm.

"I have been living in Hong Kong for the past 23 years, and the city has not achieved great accomplishments in the information technology industry," said Sequoia Capital China’s Neil Shen at the ceremony. "In the next ten years, information technology is entering the ‘smart’ era. Big data and AI related industries, such as robotics and Internet of Things, will be the key elements. These industries have high technology barrier and are protected by intellectual property, and I believe, Hong Kong could definitely outperform in these sectors. "

In addition, Hong Kong is ideally positioned to cooperate with mainland Chinese companies, especially in the Pearl River Delta region. Combining Hong Kong’s software and algorithm expertise with the strong manufacturing capacities of the Pearl River Delta cities like Guangzhou and Dongguan could create strong synergies.

"The revolution of the new information technology industry is the combination of software and hardware. If Hong Kong could cooperate with Shenzhen and Pearl River Delta, the world’s largest manufacturing base, the city could lead innovation for the whole region encompassing Guangdong, Macau and Hong Kong," Shen said.

The Hong Kong government is ready to support the initiative, as chief executive Carrie Lam said in the event that the government would provide more resources and capital for start-ups, establish more science parks and open government-owned data to the public.

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