Common purpose meridian leadership training course on - knowledge-based economy (13 june 2013)


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Common purpose meridian leadership training course on - knowledge-based economy (13 june 2013)

  1. 1.                                                                                                   Master the Money ‐ Hong Kong 2023  Opportunities and  challenges in the regional  and global context  Opportunities and challenges facing the financial sector  and the knowledge‐based economy    Mr John G. RICE Vice Chairman  General Electric Company    Mr Benjamin HUNG, JP Mr Alan LUNG Executive Director and Chief  Director and General  Executive Officer  Manager  Standard Chartered Bank  Asia‐Pacific Intellectual  (Hong Kong) Limited  Capital Centre      Hong Kong has to learn to be  Try  looking  at  Hong  Kong  More  support  is  needed  to  competitive.  from  the  outside  in  and  all  develop  Hong  Kong  into  a  the  way  up  from  the  space  knowledge‐based economy.  ship  Shenzhou  10  and  you  will see things differently.      Page 1 of 1   
  2. 2. 10‐Jan‐14 THE EIGHTH ANNUAL CONFERENCE OF THE ASIAN STUDIES ASSOCIATON OF HONG KONG P001 (E) Session 9A: Business Sector in Hong Kong 16.30-18.00 , Saturday 9 March 2013 Lady Ivy Wu Lecture Theatre, The Hong Kong Institute of Education Realizing Hong Kong’s  knowledge‐based economy  potential as part of           a rising China       ‐hks‐knowledgebased‐economy Paper P001 (E) prepared by:                                                          Dr. Gordon McConnachie                                                            Dr. Gordon McConnachie Former Technology Transfer Manager, Dow Chemical Europe                            Founding Chairman of Scottish Intellectual Assets Centre and                            Chief Technology Officer of Asia Pacific Intellectual Capital Centre                        Mr. Alan Lung                                                                      Director & General Manager of  Asia Pacific Intellectual Capital Centre  PECC Beijing Conference Zhejiang University Hangzhou About: Jinan University Guangzhou NDRC & SIPO Beijing Hong Kong SAR Government Office in Beijing Beijing Academy of Science & Technology Hong Kong Science & Technology Park Links to Scotland, USA & Europe EU in HK & Beijing IPR2 Beijing Office 1
  3. 3. 10‐Jan‐14 John Tsang’s speaker  luncheon titled:                              Hong Kong as a knowledge‐ based economy and its role  in China's economic  development   (31 May 2010) show=newsarticles&newsarticle=272 Carrie Lam’s                                                speaker luncheon titled:                                                         Policy priorities of this term of  Government ‐ Population Policy  (4 February 2013) es.asp?show=newsarticles&newsarticle=324 HKSAR Government  targets economic  development  • “This Government places as much  emphasis on economic development  emphasis on economic development – both the speed and the quality of  economic development – as we do on  livelihood issues …” • Tell me: “If Government could do  1,2,3,4,5 for us, then the following  will happen and this would be good  for Hong Kong’s economy and  therefore good for the Hong Kong  society  …” 2013/03/20130313_121636.shtml?pickList=highlight Chief Executive C.Y.Leung’s remarks at        The first meeting of the Economic        Development Commission        13 March 2013 2
  4. 4. 10‐Jan‐14 Hong Kong has always been about free trade … Sir Henry Pottinger, First Governor of Hong Kong (1841-1844) and Chris Patten, Last Governor of Hong Kong (1992-1997) THE BRITISH came ashore on Hong Kong Island in 1841 on a rising imperial tide. They worked to create a bustling business community convinced that in trade … lay the future of their world. “The Governors of HONG KONG “ by Russell Spurr Hong Kong has always been about land transaction revenue too! Source: The Foundations of the Hong Kong Revenue Regime, Civic Exchange report,                      Prof. Richard Cullen and Antonietta Wong, Civic Exchange Publication, 2008 Tea Act of the British Parliament and the Boston Tea Party (1773) which eventually led to the American War of t ll l d t th A i W f Independence (1775-1782) taught the British not to impose extra-territorial tax British Hong Kong original fiscal foundation (since 1841): •Trade and free port •Opium related revenues •Land transaction revenues Land •Other revenues Income tax was not introduced to Hong Kong until 1947: •Trade expanded •Opium tax faded •Land revenues remain 3
  5. 5. 10‐Jan‐14 Hong Kong’s potential as a  knowledge‐based Economy … In a classical economy: Factors of production: Factors of production: • Land • Labour • Capital ($)  Intangible factors of production: Intangible factors of production: • Enterprise or Entrepreneurship 4
  6. 6. 10‐Jan‐14 In a Knowledge-based Economy: Factors of production: Factors of production: • Creativity • Innovation • Wealth Creation Complementary business assets: • Manufacturing facilities • Distribution capacity • Sales force Hong Kong does not have any choice … •As a high‐cost economy, Hong  A hi h t H Kong must follow the examples of  OECD and EU in climbing up the  economic ladder; •Hong Kong should try to  •Hong Kong should try to understand what it takes to build a  Knowledge‐based Economy. 5
  7. 7. 10‐Jan‐14 Rise of China … and finding a new role for Hong Kong • China does not want to  remain a low and mid‐ remain a low and mid end “assembler” of  goods; • To get there, China can  make good use of Hong  g g Kong’s “soft power”:   rule of law/rule‐based  society, general integrity  and trust etc. Driving Hong Kong  to  become a Knowledge‐ based Economy is not  the same as central  economic planning … p g Silicon Valley has a solid  industrial base: Strong manufacturing  capacity, R&D, creativity and presence of grateful  entrepreneurs … Steve Jobs used US$150 million  from Bill Gates to restart Apple in 1997.  6
  8. 8. 10‐Jan‐14 Meso‐economic: the political economy* and           how government chooses to use public resource  to drive economic development (*rules, institutions, supporting systems and regulations) • Andrew Sheng and Xiao Geng of  the Fung Global Institute caught the  the Fung Global Institute caught the attention of the World Economic  Forum :“The new economics: Meso and Meta”‐ new‐economics‐meso‐and‐meta/ • “ … today’s mainstream micro‐ and macroeconomic models are  insufficient”; • “… Meso‐economics studies the  institutional aspects of the  economy”. Political-economy lesson from South Korea From “Catch-up” to “Creative” mode of economic development • A key political economy lesson  g g f Hong Kong could learn from South  Korea is an on‐going policy shift  away from a “catch‐up” mode to a  “creative” mode of development.  • Essentially, it is a shift away from  very focused support of “chaebol”  (large  family‐owned  conglomerates) to a focus on  conglomerates) to a focus on strengthening the innovation  capacities of SMEs.   Top right: Korean women donating  gold to support a bankrupt Korean  economy in 1998.  Bottom: Students joining dock  workers strike in Hong Kong in  2013.  7
  9. 9. 10‐Jan‐14 Hong Kong’s Innovation Eco-system? 朴槿惠 • South Korea: KIST (Founded 1966), Ministry of Future  Planning and Science (2013, Park Geun‐hye’s economic  liberalization and  creative mode of development initiatives) liberalization and “creative” mode of development initiatives) • Singapore: Economic Development Board, A*STAR,  李光耀 IP Academy of Singapore (Since 1965, Lee Kuan‐yew) • Taiwan: ITRI (工研院), Hsinchu Industrial Park,  network of statutory bodies (Since 1973, Chiang Ching‐Guo)  • Europe/Scotland: Lisbon Agenda (March 2000),  Enterprise Europe Network, EEN‐Scotland 蔣經國 • Finland: TEKES, The Federation of Finnish  Technology Industries (Finland’s “Old Money” for new industries) • Hong Kong: Innovation & Technology Bureau?  Under Secretary CEDB? Grateful entrepreneurs? Innovation is more than R&D … Innovation includes: organization  changes, training, testing, marketing and  design. • New or significantly improved product: a  new process, or a new organsiation  method etc. • Must contain a degree of novelty: new  to the firm, new to the market, or new to  the world; • Clearly broader than R&D: influenced by  factors that include government policy;  can occur in any sector of the economy – including government service, healthcare  and education. 8
  10. 10. 10‐Jan‐14 Investing in technology alone? • A policy of investing in technology  alone without knowing how to  alone without knowing how to extract economic value from it has  no future.  • Hong Kong must learn how to  manage its Knowledge Capital.  • Hong Kong must have a policy and  g g p y an Eco‐system that support the   commercialization of technology. InnoTech Hong Kong as a bridge and gateway     Gordon McConnachie, CTO of APICC and major tech‐transfer units from around the  world in Beijing (ITTN 2012 International Technology Transfer Conference, 26 March 2012) Enterprise Europe Network                           DG Enterprise and Industry, European  Commission (Marshall Hsia & Alan Lung in Beijing) Tsinghua (China) AUTM (USA) Association of University  Technology Managers (USA) 9
  11. 11. 10‐Jan‐14 Lessons to be learnt from the  Oresund Region • 1991: the governments of  Denmark and Sweden agree to  build the Oresund bridge • 1999: The report ”Øresund – the creation of a region”  concludes that the greatest  barrier to integration in the  Oresund region is lack of  communication between  citizens, businesses and public  citizens, businesses and public administration • 2000: The Oresund bridge  opens and Oresunddirekt is  launched This type of economic development is often based on:  Historical economic and cultural ties  that happen gradually over time ... but often with some degree of government facilitation Historical relations between Denmark and Sweden Historical relations between Guangdong and Hong Kong 10
  12. 12. 10‐Jan‐14 •Hong Kong’s Overall                 Ranking: 9(+2) (China:29 (‐2)) • HK is at “Stage 3” of economic development (i.e.  innovation driven) – along with Japan, Singapore,  South Korea and Taiwan 3 Basic Requirements:  ) • Basic Requirements: ((‐2)  (institution, infrastructure, macroeconomics  environment, health & primary education) • Efficiency Enhancers: 3 (‐1) (of which HK ranks no. 1 in the world in  “Financial Market Development”) Hong Kong needs to be  Hong Kong needs to be  “innovation d i innovation driven • Innovation & Innovation &                   “Innovation” driven,    “I ti ” driven” not                                   not Sophistication Factors: 22 (+2) “Basic Requirements” or  “basic requirement”   HK is below 0ECD’s average while China is improving steadily: “Efficiency” driven or “efficiency” driven. (China:31 (+3)) The proposed BJ‐GD‐HK Knowledge Corridor Maximizes BJ‐GD‐HK’s External Economy of Scale  and integrates “Expertise Cluster”, “Regional  Cluster” & “Industry Cluster” policies BJ, GD and HK on their own do not have  all the success factors needed to build a  “Silicon Valley” type of economy: • Beijing: R&D is 5.5% of Beijing’s GDP           (4 times the national average);                         50% of China’sTech‐transfer; • Guangdong: 37.7% of China’s high‐tech  manufacturing export; f t i t (Source: OECD Review of Innovation Policy – China, OECD 2008) • Hong Kong: built on a tradition of free  market and ‘good law, well administered’;  HK uses English as a business language and  is seamlessly connected to                                 the West. 11
  13. 13. 10‐Jan‐14 The proposed BJ‐GD‐HK Knowledge Corridor A strategy for China to move from “Sustained  Development” to “Sustainable Development” A strategy that combines European  expertise, China s strengths in  expertise China’s strengths in science and technology and high‐ tech manufacturing; and Hong  Kong’s service capacity to facilitate  economic transitions: • China’s “Sustained Development”  (through investment by the State) to  “Sustainable Development” (through  p ( g values created from Technology  Transfer and Technology  Commercialization); • Hong Kong’s narrow industry base  and over‐reliance on the financial  and property sectors. A compelling economic reform  argument and a coherent                    intellectual framework still missing:  產業 業 政 策 Free Market Economy, rule of law,  freedom of information and the need to  develop high value‐added industries  acknowledged by CY Leung; however: •“Service Economy” or “Manufacturing”?  • Current status of “Six New Industries”? •“Sector Neutral” or                                ”Sector Biased”?  12
  14. 14. 10‐Jan‐14 “Free Market”                 Sir John Sir John  Cowperthwaite  Cowperthawaite, Financial Secretary  Financial (1961‐1971) Secretary of Hong Kong 17 April 1961 – 30 June 1971 versus                    “Economic Planning”  John Tsang, Financial Secretary  (since 1 July 2007) • In a free market economy, government cannot predict the  winning industries and where the  next burst of economic growth  might come from. • However, Hong Kong does not seem to fully understand  Cowperthawaite’s philosophy as  one of the requirements of  “positive non‐intervention” is  the  positive part that  the “positive” part – that government must not stand still  and must do  as well as it possibly  could to facilitate.  • Indecisiveness and inaction is not  equal to prudent financial  management. “ HKSAR Government is   unlikely to be dogmatic             on the subject of Free  Market  versus Economic  Planning  Planning ”          Prof LAU Siu kai Prof. LAU Siu‐kai • “… Government’s role in economic  development has been changing since  the “Laissez‐faire” days of  Cowperthwaite and Haddon‐Cave”; • “… people are unlikely to oppose  HKSAR Government’s economic  development initiatives development initiatives”.                                   (Prof. Lau Siu‐Kai’s closing brief to delegates of the  Taiwan Study Trip on 30 June 2011) • Hong Kong has always thrived on  new way of thinking and doing – not  hanging onto past success.  Prof. LAU Siu‐kai, former head of Central Policy Unit                     (CPU), HKSAR Government at the environmental friendly Beitou Public Library during CPU’s Study Trip  to Taiwan, 27‐30 June 2011  13
  15. 15. 10‐Jan‐14 Strategies of innovation:         “Eureka” – discovery of new frontiers of                       knowledge is not necessarily the only strategy • “Battle for Architecture”,  “System Breakthrough”, “New and  Improved”, “Mass Customization”  and “Pushing the Envelope” are  some of the alternative strategies.  • Assisting SMEs to acquire  knowledge, knowhow and technologies and;  • assisting knowledge‐ intensive SME start‐ups will  have most support from the  community.  SMEs need to learn the “trade secrets” of MNEs through industry-specific Knowledge-based Economy Expert Groups (ICMGs) USA started in the early 1990s ICM Gathering* of the USA:  ICM Gathering* of the USA: (*Intellectual Capital Management Gathering) A group of ~ 30 companies, )sophisticated in the management of their intangibles. The frameworks and methods for extracting value from intangible assets were created by the companies themselves and not by academics or consultants Dr Patrick   Sullivan 14
  16. 16. 10‐Jan‐14 The proposed BJ‐GD‐HK Knowledge Corridor:  Build “Expertise Clusters” in Technology‐ transfer and Technology‐commercialization   BTEC/ITTN  in Beijing and APICC in  Hong Kong will jointly apply for  ll l l f Enterprise Europe Network (EEN)  membership as EEN‐Beijing and EEN‐ Hong Kong in late 2013 (for approval  and implementation in 2014): • EEN is the largest technology  transfer network in the world; EEN is  owned by the European Union; • Enables Tech‐transfer and Tech‐ Enables Tech‐transfer and Tech‐ commercialization know‐how to be  imported from Europe; • EEN‐Beijing and EEN‐HK will receive  coaching from EEN‐Scotland, a unit of  the Scottish Government. Knowledge‐based economy is a proven strategy …         not a novelty in OECD Countries OECD acknowledges:  • The link between Knowledge‐based The link between Knowledge based  Economy and creation of high‐wage and  high‐quality employment;   • Productivity of developed economy is  largely determined by the rate of knowledge  p g ; accumulation and technical progress;  • The importance of government policy and  support systems.  (Source: The OECD Innovation Strategy: Getting a Head Start on Tomorrow,  OECD 2010) 15
  17. 17. 10‐Jan‐14 Hong Kong: well placed in two-and-a-half of the Four pillars of the Korean knowledge economy • Economic incentive and institution  support: good economic policies and  pp g p institutions, efficient resource allocation that  support dissemination of knowledge ; • An educated and skilled labour force:  willing to continuously upgrade and adapt itself  to create and use knowledge; • An effective innovation system: of  firms, research centre, universities, consultants  and others to keeps up with global knowledge  system; • A modern information infrastructure:  that facilitates effective communication,  dissemenatation and processing of information  and knowledge. (Source: OECD Reviews of Innovation Policy:KOREA 2009) Hong Kong: well placed in two-and-a-half of the Four pillars of the Israeli knowledge economy An analysis of the innovation eco‐system of Israel  reveals essentially the same success factors as South  Korea’s innovation eco‐system:  • Economic incentives and institutional support:  Hong Kong probably rates very quite well in the area of providing  economic incentives. Availability of financial capital and an effective  innovation system: Venture capital typically plays a very  • limited role in Early‐stage Technology Development Funding (ESTD)  around the world, particularly in Hong Kong.  • Supply of human capital: Hong Kong shortcoming is  compensated by Hong Kong's international outlook, links to Mainland  China under "One Country, Two Systems" and other skills in  commerce and finance.  • Access to information and a modern  information infrastructure: Hong Kong scores well in the  access to information factors. Press freedom, a liberal political  environment and use of English as the primary business language are  important but fairly under‐rated competitive advantage.  (Source:  “Building an Innovation Economy, Public Policy Lessons from Israel”, Jonathan Avidor,  Northwestern Law School and Kellogg School of Management, May 2011) 16
  18. 18. 10‐Jan‐14 How Israel and the rest       of the world are doing it How’s Hong Kong doing?  Left: Shimon Peres, former Israeli Prime Minister helping Shai Agassi of Better Place to close a deal with the President of French automaker Renault-Nissan, Carlos Ghosn. Right: Peres with Zuckerberg of Facebook. European SMEs are keen to use Hong Kong           as a gateway to do business with China …  InnoTech Vincent Piket, Head of EU‐HK & Macau and Simon Galpin, Head of  Invest Hong Kong (Page A4, South China Morning Post, 8 May 2013) “SMEs make up more  than 98% of all  companies in Europe …  more importantly, they  are considered the  chief source of    creative ideas and creative ideas and  technological  innovation …” South China Morning Post  8 May 2013 17
  19. 19. 10‐Jan‐14 It does not take a miracle to turn Hong Kong into a Knowledge-based Economy In Israel, they say, if you do not believe in miracles you are not realistic. It does not take g g a miracle to turn Hong Kong into a Knowledge-based KnowledgeEconomy, some small adjustments will do. InnoTech (Source: Sharon Gal Or)  The 1,2,3,4,5 steps of                                      Knowledge‐base economy implementation:     in reality a lot of work must start in Hong Kong first     Hong Kong needs to brand itself as a Knowledge  City and to build an Innovation Eco‐system: 1. Invest in and implement a “Fully Examined Patent System*”   in co‐operation with SIPO** and the world’s IP systems;              (*Target implementation date according to IPD of HKSAR Government:2016/2017)                                         (**State Intellectual Property Office of China) enterprise china network 2. Support the business side of innovation – including the    expertise behind commercialization of technology;  3. Support all industries – not one industrial sector at the  expense of other sectors (the current practice of requiring  partially funded quasi‐government agencies to compete  against private sector service providers should stop); 4. Liberalize the economy – learn how Europe (particularly  Finland) screen, incubate and support knowledge‐intensive  start‐ups through very open and transparent systems; 5. Have a clearly stated policy and  co‐ordinate the fragmented  support measures now offered through various government  and quasi‐government agencies ‐‐ even in the absence of an  Innovation and Technology Bureau.  18
  20. 20. 10‐Jan‐14 “Hong Kong is losing its competitive edge…”  Q&A: Beijing warns! Hong Kong disagrees! Prof. Chan Ka-keung Secretary for the Treasury and Financial Services disagreed … the city s city’s advantages are in our own hands, citing the legal system and financial market. “Development is the only  hard truth … h d t th only when the economy  continues to thrive will livelihoods improve.  Everything else is empty talk. Like a boat  sailing down‐stream if it does not forge  Politburo Standing Committee Member  ahead …”  Zhang Dejiang at a meeting with the  Business and Professional Alliance in Beijing on 17 April 2013  Tom Holland of South China Morning Post also disagreed … far from losing its edge, HK is more competitive than ever ... th Ch i the Chairman of NPC is f i talking out of his hat on Hong Kong’s competitiveness. Who right? Who’s wrong? What do you think? The president has spoken … it now up to us,  but it will not be just implementation! Bill Clinton’s widely quoted 1992 campaign slogan: l “It’s the economy stupid!” “It’s the Implementation!” InnoTech Support from  S tf the Hong Kong  community,  from industries, consensus building, a clearly stated  policy and practical implementation support from  the HKSAR Government now needed.  Xi said Leung's policy idea, seeking change  while maintaining stability, has been widely  recognized by Hong Kong citizens. He urged  Leung and the Hong Kong SAR government  to fully implement the idea. (18 March 2013 in Beijing) Thank you! 19
  21. 21. 10‐Jan‐14 List of references: References 1. “Hong Kong and the Knowledge‐Based Economy: Developments and Prospects”,  Alan Ka‐lun Lung, Asian Education and Development Studies, Vol. 1 Iss: 3,  Emerald Group Publishing 2012                             ‐kong‐15789787 2. “Hong Kong’s Innovation and Technology Role in Mainland China’s 12th Five Year  Plan”, APICC Whitepaper #7, March 2011                ‐ks‐innotechrolein125 3. “Policies and Practices for Hong Kong as a Knowledge Economy and the Proposed  Innovation and Technology Bureau”, APICC Whitepaper #8, July 2011‐technology‐bureau‐for‐hk‐2572011 4. “Proposed: Guangzhou‐Hong Kong Knowledge Corridor”, Samson Tam Wai‐ho,  China Daily Asia Pacific Edition, 6 July 2012‐guangzhou‐hong‐kong‐knowledge‐ corridor 5. "Innovation Reinvented ‐‐ Six Games that Drive Growth", Miller and Cote,  University of Toronto Press, 2012                                                                          http://www.cae‐ 6. “The politics and specifics of knowledge‐based economy implementation                         in Hong Kong”, by Gordon McConnachie, Alan Ka‐lun Lung & Sharon Galor  (unpublished APICC Whitepaper) About the authors of “Realizing Hong Kong’s knowledge-based economy potential as part of a rising China” Dr. Gordon McConnachie, B.Sc., Ph.D Dr Gordon McConnachie is the founding Chairman of the Scottish Intellectual Assets Centre  (2003‐‐ 2007) and Chief Technology Officer of Asia Pacific Intellectual Capital Centre.  He is a chemical engineer  by training and he spent most of his working career with Dow Chemical where he grew up together with  the innovation and technology transfer systems of the world as we know them today. At Dow Chemical  Europe (1989 ‐ ‐1999), he invented the IP and Intellectual Assets Management System for the worldwide  company together with Phil Barnett and Gordon Petrash.  The system was later modified and applied  company together with Phil Barnett and Gordon Petrash The system was later modified and applied across the global company, where Gordon transferred technologies from companies and universities into  Dow Europe which brought him into intimate contact with the EU Innovation Relay Centres (now  Enterprise Europe Network). From 1999 to 2002 Gordon directed the European Intellectual Asset  Management Services of PricewaterhouseCoopers. In 2009, 2010, 2011 and 2012 Gordon was placed on  the Global IAM 250 list of leading IA Strategists, one of only a handful of experts on the list from China  and the ASEAN Nations. Dr Gordon McConnachie can be contacted at: Mr. Alan Lung Ka‐Lun Alan Lung Ka‐lun was born and educated in Hong Kong. He was also educated at the University of  Wisconsin in the USA and Wilfrid Laurier University in Canada. He spent the formative years of his  working career with international advertising and public relations agencies, including an overseas   k h l d d bl l l d posting at Ogilvy & Mather Singapore. He now chairs the Hong Kong Democratic Foundation  ( ), a political and public policy think tank founded in 1989. Alan  is skilled in converting his  knowledge of governments and public policies into practical steps to move forward “Knowledge  Economy” initiatives. He is a member of the Innovation and Technology Advisory Committee of the Hong  Kong Trade Development Council (HKTDC) and he has been promoting innovation and technology  practices in Hong Kong, Guangzhou and Beijing through the Asia Pacific Intellectual Capital Centre  ( (where he is Director and General Manager), since 2006. Alan Lung Ka‐Lun can be  contacted at: 20