Hong Kong is the fourth most densely populated region in the world, with almost 7.5 million people. Also, it's one of the major industrial centers in eastern Asia. What's more, Hong Kong is the seventh largest trading entity, as well as the largest transshipment center in the world. For such a well-developed city, famous for low and competitive taxations, Hong Kong experiences a few setbacks. The majority of those setbacks are concerning technology, innovation and sharing economy.
As a matter of fact, Hong Kong came last compared to the other major cities in Asia, such as Singapore, Shenzhen, Taipei and Seoul, in a study about developing technology and innovation conducted by the University of Hong Kong’s Public Opinion Programme back in August 2017. During the study, Hong Kong was scored 1.9 out of five, while leading cities Singapore and Seoul got 3.8 out of five. That means that even with its enormous potential, Hong Kong is simply falling behind on important matters.
Why Does Hong Kong lag behind?
Hong Kong is an autonomous region also known as the Hong Kong Special Administrative Region of the People's Republic of China. That means that Hong Kong has its own regulatory body and government. According to the residents, Hong Kong's government is less open-minded towards innovations and emerging economic systems, such as sharing economy.
This means that companies such as, Uber, Airbnb and bicycle sharing companies aren't doing so well in Hong Kong even though there's a high demand for such services. The main reason is that sharing platforms aren't regulated in Hong Kong yet. Regional competitors, such as South Korea, Singapore and Japan have already embraced innovative systems, while in Hong Kong, the government hasn't even started discussing policies regarding new platforms. That makes Hong Kong fall behind other major Asian centers.
However, a spokesman for Hong Kong's Innovation and Technology Bureau stated that the government is adopting a more open-minded approach towards innovations and shared economy. He also stated that: “For the government, we welcome innovative business models as long as they are operating in a legal manner. Relevant policy bureaus have also been reviewing their policies and regulations on an ongoing basis to ensure that they can achieve the desired policy objectives.”
Improvements on the horizon
Hong Kong is a highly competitive market but it greatly falls behind when it comes to innovation. Hong Kong is famous for its strong institutional performance, market sophistication and infrastructure, but research and development are still the two of its weakest links. Experts suggest that Hong Kong's strengths only slow down its gradual decline, without a way to catch up to the mainland and regional competitors in innovation and technology. Hong Kong has also fallen to the 16th place in global innovation scale as opposed to being ranked 7th in 2013. That shows that regional competitors are advancing by embracing innovation and technology, while Hong Kong greatly lags behind due to their indecisiveness to take on a new approach.
Still, Hong Kong managed to climb to the top in being the world's most competitive economy in 2016, according to the IMD World Competitiveness Centre, due to its low and simple taxation with no restrictions on capital flows. This environment encourages new startups to rise and develop thanks to the economic efficiency, as well as business efficiency and infrastructure. New businesses flourish by taking advantage of the latest trends. For instance, many startups now use search engine optimization in Hong Kong, in order to make themselves more visible. It's a sign of progress and improvement, but there's still a long way to go.
Financial Secretary John Tsang Chun-wah stated that: “In light of the fierce competition in the global arena, we will strive to uphold our prevailing competitive edge and continue to search for new growth areas, so as to strengthen our position as an international financial, trading and business centre and enhance Hong Kong’s long-term competitiveness.” It proves that Hong Kong's potential cannot easily be dismissed. Even though other major centers in eastern Asia are gaining an edge, it doesn't mean that there's no hope for Hong Kong to catch up to its competitors. According to the Chinese University lecturer Stephen Wong Yuen-shan: "Hong Kong is a small and open economy, which enables it to tackle economic headwinds in a more flexible way."
Hong Kong's primary focus may not be on technology and innovation at the moment, but their strong economic growth and potential can certainly help this city rise above its current situation. Also, even though the government and the public have different perceptions on things, it's in Hong Kong's best interest to start leveraging innovation and adapting new technologies that will help it grow even further.