By Chen Gong, Global Times
The direction of the Hong Kong economy is a challenging question. Hong Kong has limited space and a dense population. Most of the factories have moved to the Chinese mainland. The developed financial and real estate industries act as two pillars of its economy.
However, the booming real estate industry has raised business costs, making it difficult for industries to settle in Hong Kong. Finance and real estate have “locked up” the Hong Kong economy. Since there are few other industries, there’s limited leeway for the city to increase job and income growth.
The government of the Hong Kong Special Administrative Region has been struggling to offer an effective solution to change the economic situation.
The fundamental reasons include changing industrial policies and a lack of policy researchers in the related industrial fields. But there are opportunities for industrial revitalization. This would require the government to set the goal of building Hong Kong into the San Francisco of Asia.
In the modern era, education has become a crucial resource for productivity in social development. Hong Kong happens to have a high-quality education industry. The University of Hong Kong (HKU) and other universities have laid a solid foundation for the local biotechnology industry.
The education and technology field can combine with the huge market in the Chinese mainland, creating miracles in the biotechnology industry. For instance, according to HKU, it has invented a patented technology named “flow-through hybridization” and licensed it to a mainland biotechnology company called Hybribio.
China is a huge market with great consumption potential. China is also a country with large aged population of 241 million people who are 60 or older. The older a country gets, the more biomedical support it will need. Biotechnology in the mainland is just at its beginning, for many reasons. The tremendous demand for medical care supported by biotechnology gives Hong Kong with a great basis for development. The city’s government has to make the right industry choice.
The government has heeded the importance of technology for Hong Kong’s development and made policy adjustments accordingly. For example, a technology park has been built by the local government. The park has attracted more than 630 technology companies. The incubation program in the park has supported more than 260 start-ups. The park also provides technological infrastructure and services, including investor matching.
Meanwhile, the stock exchange in Hong Kong built an IPO platform for companies in the fields of biomedical technology, electronic engineering, green technology, information and communication technology and material and precision engineering to raise funds.
However, the industrial policies lack a firm and consistent focus. A lot has been said but little has been done. There is not a functional system from resource allocation to technology development. The fields that get the preferential policies and support are only the popular ones in the world. The Hong Kong government alone does not have the resources to cover all the emerging fields.
The technology advantage of Hong Kong has drawn attention as well as investment from the mainland. Sequoia Capital and the Hong Kong University of Science and Technology jointly created the Hong Kong X-Tech Start-up Platform. The platform has sponsored 120 early-stage projects and 50 angel projects.
The industrial policy has a clear direction but too much ambition. The distribution of industry is too broad. No city in the world can develop so many industries at once.
Like San Francisco, which is famous for its biomedical industry. Hong Kong is only one city, so making itself the San Francisco of Asia will be more than enough. The biomedical industry, based in San Francisco, is a key part of California’s economy.
The biotechnology industry in San Francisco alone has attracted 30 percent of the total investment in California. Information technology and biotechnology are inseparable. They can develop together, and biotechnology will get ahead faster because it is more practical.
The problem is that Hong Kong has to have a clear industrial policy, seeking better coordination among industries and better allocation of resources. While maintaining its advantages in the financial and real estate sectors, Hong Kong must be more explicit about becoming the San Francisco of Asia.
The author is chief research fellow at the Beijing-based private strategic think tank Anbound. [email protected]