Presentation at HKICC 2011 Plenary Session

1. “New
Paradigm
in
Deepening
GD-­‐HK
CEPA
Coopera7on”
HKICC
2011
Plenary
Session:
“Deepening
of
the
ICT
Industry
CollaboraLon
in
the
PRD
Region”
Prepared
by:
Al
Kwok
Founder,
GD-­‐HK
InternaLonal
Science
Park
Alliance
Ltd.
Founder,
China
InternaLonal
Intellectual
Property
Services
Ltd.
Governor
&
Co-­‐founder,
Savantas
Policy
InsLtute
Former
VP
&
CIPO,
NetLogic
Microsystems
(“NETL”)
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
1
粤港（广州南沙）科技园投资服务有限公司

2. Author’s
IT/IP
Business
Background
 New
paradigm:
IP
are
crown
jewels
for
knowledge-­‐based
companies
 Joined
Quality
Semi.
Inc.
in
1989
as
a
member
of
its
founding
team
licensing
&
transferring
CMOS
technology
&
products
to
Japanese
fab
(Foundry)
partners
 Executed
IP
license
business
model,
transferring
engineering
know-­‐how
to
licensee
partners
and
bringing
up
foundry
capability
&
capacity
within
a
year
 Joined
PMC-­‐Flash
in
1996
(as
VP
&
CIPO)
to
start
the
IP
license
business
 Took
advantages
of
PMOS
flash
for
embedded
NVM
in
SOC
design
 Managed
patent
por_olio
generaLon
for
comprehensive
IP
protecLon
 Secured
license
(&
ODM)
agreements
with
top-­‐Ler
Japanese
firms
(>US$10M)
 Joined
NMI
(“NETL”)
in
1998
(as
VP
&
CIPO)
to
iniLate
IP
por_olio
dev.
program
 Set
up
a
system
to
ensure
con7nuous
innova7on
&
IP
genera7on
 Set
up
top-­‐management
patent
commidee,
and
patent
generaLon
and
reward
programs
 Promoted
and
implemented
patent
programs
to
all
engineering
staff
 Building
an
impressive
patent
porLolio
since
1998
 In-­‐house
patent
adorney
to
manage
IP
creaLon/development
 Enabling
conLnuous
cugng-­‐edge
product
developments
including
knowledge-­‐
based
processors
and
“NETL7”
(Layer
7
switching)
 CreaLng
significant
entry
barriers
against
compeLLons
 Ensuring
NMI’s
long-­‐term
leadership
and
profitability
in
NSE
market
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
2
粤港（广州南沙）科技园投资服务有限公司

3. Outline
“Delivering
Sustainable
Value
in
a
Knowledge
Economy
–
The
Challenge
for
Hong
Kong”
Product/Service
Focus
=>
Value
Engineering
Equa7ons
⇒ End-­‐to-­‐end
Product
Lifecycle
Analyses
⇒ Complete
Value-­‐Chain
Analyses
(focusing
on
Mission-­‐and-­‐Lme
CriLcal
Links
in
the
Chain)
⇒ SCM
+
ApplicaLon-­‐Service
Chain
Management
⇒ New
Applica7on/Service
PlaLorms
+
China
Market
Sustainability
&
Scalability
(Pilot
Site!?)
⇒ GD-­‐HK
CEPA
Special-­‐policy
Zone
@
Nansha/GZ
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
3
粤港（广州南沙）科技园投资服务有限公司

4. The
Value
Hierarchy
(Business
Models)
Presented
at
Intellectual
Property
Symposium
2002
in
Guangzhou
on
December
10,
2002
Brand Innovation
Intellectual Property (IP)
Values/Profit Margins
50%
Applications (Mkt. & Standards)
System Integration (Archit., …)
Outsourcing
40%
Trend
Engineering (Design, ODM,..)
30%
Manufacturing (Process, OEM)
Consumer recognition Core competency
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
Savantas
ConfidenLal
4
粤港（广州南沙）科技园投资服务有限公司

5. The
Value
Chain
(=>
DemandSupply
in
Alignment)
Great
end-­‐to-­‐end
push-­‐pull
effect
for
market
scaling
thru
lifecycles
For
Consumer
Electronics
Market
(Ecosystem)
Consumer
Markets
(End
Users)
Service Providers Various
Applica7ons/Services
System
Manuf.
Differen7ated
Applica7on
Designs
System
Integrators
System
Applica7on
PlaLorm(s)
Generic
Reference
Design
(w/ other chips)
IC
S/W
PlaLorm
(API,
drivers,
etc.)
IC
Design
houses
IC
H/W
PlaLorm
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
Savantas
ConfidenLal
5
粤港（广州南沙）科技园投资服务有限公司

6. Raising
Values
of
a
Product
(IP
is
the
Core)
• 价格
=
给客户的价值
=>
Price
=
Values
to
Customers
价格
=
成本+服务+IP授权+品牌
(价格 = 给客户的价值) • Pre-­‐sale
services
mean
design-­‐win
efforts
providing
soluLons
to
address
customers’
problems
Brand
RecogniLon
• This
is
the
best
sources
of
innova7on
(品牌认知) and
ideas
for
the
next-­‐generaLon
Increasing Values (提高增值)
products
(Product
&
Tech
Roadmaps)
• Post-­‐sale
services
mean
reducing
Embedded
IP
Licensing
customers’
costs
of
ownership,
(隐含IP授权) extending
the
useful
lifeLme
of
the
product,
generaLng
recurring
sales
&
product
improvement
ideas
Pre-­‐
&
Post-­‐Sale
Services
• Embedded
IP
licensing
means
the
(售前及售后的服务) customers
can
use
the
product
IP
for
their
own
product
uplioing
&
differenLaLons
-­‐
e.g.,
“Intel
Inside”
Manufacturing
Cost
• Brand
recogni7on
means
the
(生产成本) customers
recognize
the
product
and
its
maker
for
superb
quality,
performance,
reliability
&
services
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
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粤港（广州南沙）科技园投资服务有限公司

7. IT
Business
Food-­‐chain
 Hierarchy of IT Business (from “service to consumers” as the top
of the food-chain with highest Gross Margin then down):
Service requirements drive H/W platform improvements
Service (to consumers) <=> Domestic market (localization)
(China market is huge enough)
Application (for service) <=> Domestic market (localization)
(China centric standards & IPs)
Network platform <=> Domestic stds. for local services/appl.
International stds. (for global interface)
System Integration <=> Domestic market (localization) vs. Int’l. mkt.
(for applications) (China centric standards & IPs vs. Int’l. ones)
S/W & F/W platform <=> Int’l and domestic stds. (global & local)
H/W platform <=> International stds. (global IC supplies)
Existing OEM/ODM business model breaks the IT Business Food Chain
without positive feedback from Service to drive next product dev. cycle
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
CIIPS
PresentaLon
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粤港（广州南沙）科技园投资服务有限公司

8. High-­‐end
vs.
Low-­‐end
Example
 China
e-­‐book
as
a
low-­‐end
example
 “Shanzhai”
business
model
(山寨型商业模式)
 Copy
others’
design
concepts
 Add
more
common
(proven)
applicaLons
 Aim
for
low-­‐cost
and
low-­‐price
(~US$250)
 Lidle
post-­‐sale
on-­‐going
services
 Lidle
connecLon
to
on-­‐going
e-­‐commerce
service
 Lidle
customer
feedback,
no
learning
and
no
product
innovaLon
 Apple’s
iPad
as
a
high-­‐end
example
 Designed
as
an
e-­‐commerce
CRM
tool
(Led
to
iTunes
e-­‐commerce
pla_orm)
-­‐
one-­‐stop
e-­‐commerce
business
ecosystem
 More
recurring
business
from
post-­‐sale
of
iPad
(hardware)
 Aim
for
high-­‐value
and
affordable
price
(~US$600)
 Complete
the
“H/W
plaLorm
to
Service”
end-­‐to-­‐end
cycle
for
next-­‐
genera7on
product
innova7on
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
CIIPS
PresentaLon
8
粤港（广州南沙）科技园投资服务有限公司

9. Market
Posi7oning
-­‐
Product
Focus
ecosystem:
Industrial
market
by
Under-­‐developed
Too
Far-­‐out:
nature
with
higher
(50-­‐>70%)
Building
infrastructure
&
Not
ready,
hype,
bubble
Ecosystem
Future
Growth:
Future
Growth:
Long-­‐term
Longest-­‐term
profit
margins
Future
Growth:
Well-­‐developed
Short-­‐term
Cut-­‐throat
Well-­‐developed
infrastructure:
Compe77on
consumer
market
by
nature
with
(me
too!)
lower
(30-­‐>50%)
profit
margins
Mature
(must
have)
FuturisLc
(nice
to
have)
Applica7on
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
CIIPS
PresentaLon
9
粤港（广州南沙）科技园投资服务有限公司

10. Types
&
Ranking
of
Innova7on
In
the
order
of
lasLng
value
impact
to
society
(from
most
to
least):
 New
business
model
(global
producLvity
jump)
-­‐
great
lasLng
value
impact
 E.g.:
e-­‐Commerce
(internet),
pure-­‐play
foundry
business
model,
carbon
trading…
 New
business
process
(global
producLvity
jump)
-­‐
great
lasLng
value
impact
 E.g.:
Window/Office
(new
work
environment),
outsourcing,
TQM,
ERP…
 New
applicaLon/market
(for
exist.
prod.
or
tech.)
-­‐
great
value
impact
 E.g.:
GPS,
RFID,
radar
guiding…
-­‐
from
military
to
commercial
applicaLons
 New
technology
(for
exisLng
product)
-­‐
great
value
impact
someLmes
 E.g.:
High-­‐speed
CMOS
(over
NMOS)
for
power
reducLon
and
device
scaling
 New
product/service
(for
exisLng
market)
-­‐
medium
value
impact
 E.g.:
On-­‐line
shopping/trading,
SMS
(China),
digital
broadcast…
 New
combinaLon
of
package
of
technologies,
products
and
services
 E.g.:
Apple’s
iPhone
and
iPod,
Blackberry,
solar,
clean
tech…
 New
design
(implementaLon
or
appearance)
-­‐
limited
value
impact
 New
system
architectures:
e.g.,
the
Sandisk
“338”
patent
for
flash-­‐memory
card
 New
subsystem/circuitry
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
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CIIPS
PresentaLon
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粤港（广州南沙）科技园投资服务有限公司

11. Business
Development
PlaLorm
in
GD-­‐HKISP
(Nansha)
3
Industrial
value-­‐chain
developments
can
drive
professional
service
businesses
• LogisLc
&
Supply-­‐chain
Management
Data
Special
• 3D
AnimaLon
ProducLon
&
ExhibiLon
Zone • Intelligent
City
&
Smart
System
Designs
• Professional
ICT
Services
Three
• Environment
Improvements
Industrial
• Low-­‐carbon
Footprint
Management
Eco-­‐Tech • New
Materials
&
Resource
Efficiency
Themes
• New
Business
Models:
Carbon-­‐Trade,
EMC
• Solar
Photovoltaic
Renewable
• DistribuLve
Power
GeneraLon
&
Storage
Energies • Smart
Grid
&
Power
SCM
• Green
Building
,
Electric
Vehicle…
Strategic
Enabling
Pillar
PlaLorms
(All
Megatrend
Game-­‐Changers)
IP
ProtecLon
Data
Security
&
Carbon
ReducLon
&
Sharing Privacy
ProtecLon
&
Credit
Trade
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
11
粤港（广州南沙）科技园投资服务有限公司

12. Appl./Services
PlaLorms
for
Knowledge
Economy
 InternaLonal
IP
Trading,
Professional
Services
for
IP
CommercializaLon;
IP
ValuaLon
System
 Professional
Development
and
CerLficaLon
for
Intellectual
(&
CollaboraLve)
InnovaLon
 InternaLonal
Data
Security
&
Privacy
ProtecLon
Services
 InternaLonal
Food
Safety
End-­‐to-­‐end
Management
&
Tracking
Services
 InternaLonal
End-­‐to-­‐End
LogisLc
Service
Management
 InternaLonal
Carbon
Credit-­‐earning
&
Trading
Services
 Smart-­‐city
ApplicaLons
&
InformaLon
Management
 InternaLonal
Medical
Tourism,
e-­‐Medical
Global
Resource
Management
Services
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
12
粤港（广州南沙）科技园投资服务有限公司

13. Success
Example:
GPS-­‐based
Services
(MyCard
Ltd.)
GPS/GPRS Logistics Service Platform - System Architecture
Control Call Data Center /
Center Center Access Platform
GPRS
Real-time Coordination, Data analyses / Bus.
Location Security Checks Intel., Map Database &
Tracking & Alerts User Web Portal
Logistics Co. Customer- User Access Control &
specified Call Portal Management
Forwarding
Services
Logistics & Passenger Agents
Map Database Mgmt.
Security
Senders & Monitoring &
Receivers Alerts GUI & Templates
Customs
Emergency Data Storage &
Insurance Alerts Archives
Co./ Bank -
Asset Mgt.
Functions of Control/Call/Data Centers & Service Platform
August 1, 2008 Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
MyCard Confidential 913
粤港（广州南沙）科技园投资服务有限公司

14. Success
Example:
GPS-­‐based
Service
(MyCard
Ltd.)
GPS/GPRS Logistics Service Platform - Network System
MyCard capabilities:
In Hong Kong In Mainland •Web ASP services
•Map database
•Data center
PCCW China
(Sunday) Telecom 10M lease line
Wired & wireless Wired network
network Internet MyCard
Hutchison Sinotrans 4M+
Wireless network Wired network lease line
China
Mobile
Wireless network
Customers monitor vehicle activities on MyCard web-portal
August 1, 2008 MyCard Confidential 10
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
14
粤港（广州南沙）科技园投资服务有限公司

15. Knowledge-­‐based
Economic
Trend
Evolution of Intangible Assets – U.S. Companies
11/25/11 Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
15
15
粤港（广州南沙）科技园投资服务有限公司

16. Stage
of
Enterprise
Development:
China
vs.
US
Professional
Service
Opportuni7es
to
address
China’s
corporate
uplijing
needs
Human Primary
Stage of Key asset / Domain Scalability
resource capital
development value driver knowledge factor
development sources
Family- Hands-on
Agriculture Farmland Family Copy
recipe training
Factory- Low-cost Task Hands-on Family & Counterfeit &
cluster era labor oriented training friends clone
Industrial Automated Techno- Traditional Industrial
Profit-driven
mass-prod. logical investors, Standards,
era training
technology oriented govt. prog. trade assoc.
Business (Business) On-job VC, Professional
Post-industrial
services/ Process professional Institution Standards, IP
era know-how oriented development & license
investors
Knowledge “Open
Business “Integrated “Learning “Knowledge
based source
intelligence system” ecosystem” sharing”
economy platform”
On
average,
US
SMEs
are
at
“Post-­‐industrial”
stage
of
development,
whereas
the
majority
of
China
SMEs
are
at
“Factory-­‐cluster”
stage
of
development.
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
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粤港（广州南沙）科技园投资服务有限公司

17. Conclusion
 Knowledge
Economy
must
be
Prof.
Service/Applica7on
driven
 Core
competency
in
professional
services
is
the
key
to
global
compe77veness
 IBM’s
transformaLon
is
a
good
example
(from
H/W
to
Professional
Services)
 Must
focus
on
“ True
Demand”
–
Mission/Time
Cri7cal
ones
 Supply-­‐side
economics
(Reaganomics)
is
a
dead-­‐end
–
unsustainable
 Real
economic
growth
must
come
from
“True
Demand”
–
not
unsustainable
Cheap-­‐Credit
Inflated
False
Demand
causing
conLnual
global
economic
crises
 OEM/ODM,
SCM…
are
for
the
“Push
Effect”.
From
the
Demand
Side,
Services
and
ApplicaLons
based
on
standardized
services
provide
the
“Pull
Effect”
–
the
horse
(engine
providing
the
Pull
Effect)
should
be
in
front
of
the
cart
(economy)!
 “Professional
Services”
is
the
Intrinsic
Source
of
Innova7on
&
IP
 Valuable
IP
development
is
from
Pre-­‐
and
Post-­‐Sale
Professional
Services
 Core
competency
development
requires
“ Technical,
Business
and
IP/Legal
Domain
ExperLse”
–
HK’s
educaLon
&
prof.
development
systems
have
to
adapt
 Hong
Kong
&
the
whole
world
need
China
for
market
scalability
 GD-­‐HK
Interna7onal
Science
Park
at
Nansha
(Guangzhou)
is
intended
to
be
the
CEPA
Special-­‐Policy
Pilot
(Landing)
Site
(for
product/service
localizaLon)
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
17
粤港（广州南沙）科技园投资服务有限公司

18. Thank
You
Very
Much
For
Your
AdenLon!
al.kwok@ns-­‐isp.org
Guangdong-­‐Hong
Kong
(Guangzhou
Nansha)
Science
Park
Investment
Services
Ltd.
18
粤港（广州南沙）科技园投资服务有限公司