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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
          http://www.slideshare.net/AlanLung/realising-hks-knowledgebased-economy
                       Paper P001 (E) prepared by:
                        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




                                                          Beijing Academy of Science &
  Hong Kong SAR Government Office in Beijing              Technology



  Hong Kong Science &
  Technology Park




Links to Scotland, USA & Europe
                                     EU in HK & Beijing       IPR2 Beijing Office
John Tsang’s speaker
                                            luncheon titled:
                                            Hong Kong as a knowledge-
                                            based economy and its role
                                            in China's economic
                                            development
                                            (31 May 2010)
                                            http://www.hkdf.org/newsarticles.asp?
                                            show=newsarticles&newsarticle=272




                       Carrie Lam’s
         speaker luncheon titled:
  Policy priorities of this term of
 Government - Population Policy
                (4 February 2013)
           http://www.hkdf.org/newsarticl
es.asp?show=newsarticles&newsarticle=324
HKSAR Government
                                                                 targets economic
                                                                 development
                                                                 • “This Government places as much
                                                                 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 …” http://www.news.gov.hk/en/record/html/
                                                                      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

http://www.info.gov.hk/gia/general/201301/17/P201301170324.htm
Hong Kong’s potential as a
knowledge-based Economy …
In a classical economy:
       Factors of production:
       • Land
       • Labour
       • Capital ($)

       Intangible factors of production:
       • Enterprise or Entrepreneurship
In a Knowledge-based Economy:

       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
Kong must follow the examples of
OECD and EU in climbing up the
economic ladder;
•Hong Kong should try to
understand what it takes to build a
Knowledge-based Economy.
Rise of China … and finding
 a new role for Hong Kong
               • China does not want to
               remain a low and mid-
               end “assembler” of
               goods;

               • To get there, China can
               make good use of Hong
               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 …




                         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.
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
                                attention of the World Economic
                                Forum :“The new economics: Meso
                                and Meta” http://forumblog.org/2012/10/the-
                                new-economics-meso-and-meta/


                                • “ … today’s mainstream micro-
                                and macroeconomic models are
                                insufficient”;
                                • “… Meso-economics studies the
                                institutional aspects of the
                                economy”.
Hong Kong: well placed in two-and-a-half out of the
Four pillars of the knowledge economy

                                                                • Economic incentive and institution
                                                                support: good economic policies and
                                                                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;
Students joining dock workers’ strike in Hong Kong:
                                                                • A modern information infrastructure:
     A key political economy lesson Hong Kong could learn       that facilitates effective communication,
        from Korea is an on-going policy shift away from a
   “catch-up” mode to a “creative” mode of development.         dissemenatation and processing of information
 Essentially, it is a shift away from very focused support of
“chaebol” (large family-owned conglomerates) to a focus         and knowledge.
      on strengthening the innovation capacities of SMEs.       (Source: OECD Reviews of Innovation Policy: KOREA 2009)
Hong Kong’s Innovation Eco-system?
    朴槿惠
          • Finland: TEKES, The Federation of Finnish
          Technology Industries (Finland’s “Old Money” for new industries)
          • Taiwan: ITRI (工研院), Hsinchu Industrial Park,
          network of statutory bodies (Since 1973, Chiang Ching-Guo)
    李光耀   • Singapore: Economic Development Board, A*STAR,
          IP Academy of Singapore (Since 1965, Lee Kuan-yew)
          • South Korea: KIST (Founded 1966), Ministry of Future
          Planning and Science (2013, Park Geun-hye’s economic
          liberalization and “creative” mode of development initiatives)

    蔣經國   • Europe/Scotland: Lisbon Agenda (March 2000),
          Enterprise Europe Network, EEN-Scotland
          • 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.
Investing in technology alone?
       • A policy of investing in technology
       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
       an Eco-system that support the
       commercialization of technology.
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

Tsinghua (China)       Association of University
      AUTM (USA)      Technology Managers (USA)
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
                   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
•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

• Basic Requirements: 3(-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”)
• Innovation &
Sophistication Factors:                         22 (+2)
HK is below 0ECD’s average while China is improving steadily:

                              (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;
                       (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.
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
                      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
                      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
                                                          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”?
SirJohn
 Sir John
 Cowperthwaite
                                                         “Free Market”
Cowperthawaite,
 Financial Secretary                                                  versus
Financial
 (1961-1971)
Secretary of                                             “Economic Planning”
Hong Kong                                                • In a free market economy,
17 April 1961 –                                          government cannot predict the
30 June 1971                                             winning industries and where the
                                                         next burst of economic growth
                                                         might come from.
                                                         • However, Hong Kong does not
                                                         seem to fully understand
                       John Tsang, Financial Secretary
                                   (since 1 July 2007)
                                                         Cowperthawaite’s philosophy as
                                                         one of the requirements of
                                                         “positive non-intervention” is
                                                         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 ”      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”.
                                                                        (Prof. Lau Siu-Kai’s closing brief to delegates of the
                                                                        Taiwan Study Trip on 30 June 2011)

                                                                        • Hong Kong has always thrived on
               Prof. LAU Siu-kai, former head of Central Policy Unit
  (CPU), HKSAR Government at the environmental friendly Beitou
                                                                        new way of thinking and doing – not
Public Library during CPU’s Study Trip to Taiwan, 27-30 June 2011       hanging onto past success.
Strategies of innovation:
  “Eureka” – discovery of new frontiers of
knowledge is not necessarily the only strategy
      http://www.cae-acg.ca/documents/Dpliant_Innovation_Reinvented_v4.pdf


                                  • “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
                   http://www.slideshare.net/AlanLung/what-is-intellectual-capital-management-apicc-whitepaper-2


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
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
                          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-
                          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
             Economy and creation of high-wage and
             high-quality employment;

             • Productivity of developed economy is
             largely determined by the rate of knowledge
             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)
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 develop
                   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)
                   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
enterprise china      support measures now offered through various government
network               and quasi-government agencies -- even in the absence of an
                      Innovation and Technology Bureau.
The president has spoken …
           it’s now up to us in Hong Kong!
                                                  Bill Clinton’s
                                                widely quoted
                                                1992 campaign
                                                         slogan:
                                                        “It’s the
                                                      economy,
                                                       stupid!”



                                             “It’s the Implementation!”
                                              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
      Support from the Hong Kong                      to fully implement the idea.
                                                       (18 March 2013 in Beijing)
         community, from industries,
consensus building, a practical policy and        http://www.chinadaily.com.cn/china/2013-
                                                         03/18/content_16317997.htm
     promotion support from the HKSAR
               Government now needed.
                                             Thank you!
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
    http://www.slideshare.net/AlanLung/hong-kong-15789787
2. “Hong Kong’s Innovation and Technology Role in Mainland China’s 12th Five Year
   Plan”, APICC Whitepaper #7, March 2011
    http://www.slideshare.net/AlanLung/h-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
    http://www.slideshare.net/AlanLung/innovation-technology-bureau-for-hk-2572011
4. “Proposed: Guangzhou-Hong Kong Knowledge Corridor”, Samson Tam Wai-ho,
   China Daily Asia Pacific Edition, 6 July 2012
    http://www.chinadailyapac.com/article/proposed-guangzhou-hong-kong-knowledge-
    corridor
5. "Innovation Reinvented -- Six Games that Drive Growth", Miller and Cote,
   University of Toronto Press, 2012
    http://www.cae-acg.ca/documents/Dpliant_Innovation_Reinvented_v4.pdf
About the authors:
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
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: gmcconnachie@apicc.asia

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 chairs the Hong Kong Democratic
Foundation (www.hkdf.org), 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 (www.apicc.asia) (where he is Director and General Manager), since 2006. Alan Lung Ka-Lun can
be contacted at: alanlung@apicc.asia

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What got us here will not get us there! (Updated 30 March 2013)

  • 1. 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 http://www.slideshare.net/AlanLung/realising-hks-knowledgebased-economy Paper P001 (E) prepared by: 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
  • 2. PECC Beijing Conference Zhejiang University Hangzhou About: Jinan University Guangzhou NDRC & SIPO Beijing Beijing Academy of Science & Hong Kong SAR Government Office in Beijing Technology Hong Kong Science & Technology Park Links to Scotland, USA & Europe EU in HK & Beijing IPR2 Beijing Office
  • 3. John Tsang’s speaker luncheon titled: Hong Kong as a knowledge- based economy and its role in China's economic development (31 May 2010) http://www.hkdf.org/newsarticles.asp? show=newsarticles&newsarticle=272 Carrie Lam’s speaker luncheon titled: Policy priorities of this term of Government - Population Policy (4 February 2013) http://www.hkdf.org/newsarticl es.asp?show=newsarticles&newsarticle=324
  • 4. HKSAR Government targets economic development • “This Government places as much 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 …” http://www.news.gov.hk/en/record/html/ 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 http://www.info.gov.hk/gia/general/201301/17/P201301170324.htm
  • 5. Hong Kong’s potential as a knowledge-based Economy …
  • 6. In a classical economy: Factors of production: • Land • Labour • Capital ($) Intangible factors of production: • Enterprise or Entrepreneurship
  • 7. In a Knowledge-based Economy: Factors of production: • Creativity • Innovation • Wealth Creation Complementary business assets: • Manufacturing facilities • Distribution capacity • Sales force
  • 8. Hong Kong does not have any choice … •As a high-cost economy, Hong Kong must follow the examples of OECD and EU in climbing up the economic ladder; •Hong Kong should try to understand what it takes to build a Knowledge-based Economy.
  • 9. Rise of China … and finding a new role for Hong Kong • China does not want to remain a low and mid- end “assembler” of goods; • To get there, China can make good use of Hong Kong’s “soft power”: rule of law/rule-based society, general integrity and trust etc.
  • 10. Driving Hong Kong to become a Knowledge- based Economy is not the same as central economic planning … 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.
  • 11. 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 attention of the World Economic Forum :“The new economics: Meso and Meta” http://forumblog.org/2012/10/the- new-economics-meso-and-meta/ • “ … today’s mainstream micro- and macroeconomic models are insufficient”; • “… Meso-economics studies the institutional aspects of the economy”.
  • 12. Hong Kong: well placed in two-and-a-half out of the Four pillars of the knowledge economy • Economic incentive and institution support: good economic policies and 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; Students joining dock workers’ strike in Hong Kong: • A modern information infrastructure: A key political economy lesson Hong Kong could learn that facilitates effective communication, from Korea is an on-going policy shift away from a “catch-up” mode to a “creative” mode of development. dissemenatation and processing of information Essentially, it is a shift away from very focused support of “chaebol” (large family-owned conglomerates) to a focus and knowledge. on strengthening the innovation capacities of SMEs. (Source: OECD Reviews of Innovation Policy: KOREA 2009)
  • 13. Hong Kong’s Innovation Eco-system? 朴槿惠 • Finland: TEKES, The Federation of Finnish Technology Industries (Finland’s “Old Money” for new industries) • Taiwan: ITRI (工研院), Hsinchu Industrial Park, network of statutory bodies (Since 1973, Chiang Ching-Guo) 李光耀 • Singapore: Economic Development Board, A*STAR, IP Academy of Singapore (Since 1965, Lee Kuan-yew) • South Korea: KIST (Founded 1966), Ministry of Future Planning and Science (2013, Park Geun-hye’s economic liberalization and “creative” mode of development initiatives) 蔣經國 • Europe/Scotland: Lisbon Agenda (March 2000), Enterprise Europe Network, EEN-Scotland • Hong Kong: Innovation & Technology Bureau? Under Secretary CEDB? Grateful entrepreneurs?
  • 14. 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.
  • 15. Investing in technology alone? • A policy of investing in technology 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 an Eco-system that support the commercialization of technology.
  • 16. 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 Tsinghua (China) Association of University AUTM (USA) Technology Managers (USA)
  • 17. 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 administration • 2000: The Oresund bridge opens and Oresunddirekt is launched
  • 18. 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
  • 19. •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 • Basic Requirements: 3(-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”) • Innovation & Sophistication Factors: 22 (+2) HK is below 0ECD’s average while China is improving steadily: (China:31 (+3))
  • 20. 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; (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.
  • 21. 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 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 values created from Technology Transfer and Technology Commercialization); • Hong Kong’s narrow industry base and over-reliance on the financial and property sectors.
  • 22. A compelling economic reform argument and a coherent intellectual framework still missing: 產 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”?
  • 23. SirJohn Sir John Cowperthwaite “Free Market” Cowperthawaite, Financial Secretary versus Financial (1961-1971) Secretary of “Economic Planning” Hong Kong • In a free market economy, 17 April 1961 – government cannot predict the 30 June 1971 winning industries and where the next burst of economic growth might come from. • However, Hong Kong does not seem to fully understand John Tsang, Financial Secretary (since 1 July 2007) Cowperthawaite’s philosophy as one of the requirements of “positive non-intervention” is 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.
  • 24. “ HKSAR Government is unlikely to be dogmatic on the subject of Free Market versus Economic Planning ” 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”. (Prof. Lau Siu-Kai’s closing brief to delegates of the Taiwan Study Trip on 30 June 2011) • Hong Kong has always thrived on Prof. LAU Siu-kai, former head of Central Policy Unit (CPU), HKSAR Government at the environmental friendly Beitou new way of thinking and doing – not Public Library during CPU’s Study Trip to Taiwan, 27-30 June 2011 hanging onto past success.
  • 25. Strategies of innovation: “Eureka” – discovery of new frontiers of knowledge is not necessarily the only strategy http://www.cae-acg.ca/documents/Dpliant_Innovation_Reinvented_v4.pdf • “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.
  • 26. SMEs need to learn the “trade secrets” of MNEs through industry-specific Knowledge-based Economy Expert Groups (ICMGs) USA started in the early 1990s http://www.slideshare.net/AlanLung/what-is-intellectual-capital-management-apicc-whitepaper-2 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
  • 27. 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 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- 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.
  • 28. Knowledge-based economy is a proven strategy … not a novelty in OECD Countries OECD acknowledges: • 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 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)
  • 29. 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 develop 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) 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 enterprise china support measures now offered through various government network and quasi-government agencies -- even in the absence of an Innovation and Technology Bureau.
  • 30. The president has spoken … it’s now up to us in Hong Kong! Bill Clinton’s widely quoted 1992 campaign slogan: “It’s the economy, stupid!” “It’s the Implementation!” 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 Support from the Hong Kong to fully implement the idea. (18 March 2013 in Beijing) community, from industries, consensus building, a practical policy and http://www.chinadaily.com.cn/china/2013- 03/18/content_16317997.htm promotion support from the HKSAR Government now needed. Thank you!
  • 31. 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 http://www.slideshare.net/AlanLung/hong-kong-15789787 2. “Hong Kong’s Innovation and Technology Role in Mainland China’s 12th Five Year Plan”, APICC Whitepaper #7, March 2011 http://www.slideshare.net/AlanLung/h-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 http://www.slideshare.net/AlanLung/innovation-technology-bureau-for-hk-2572011 4. “Proposed: Guangzhou-Hong Kong Knowledge Corridor”, Samson Tam Wai-ho, China Daily Asia Pacific Edition, 6 July 2012 http://www.chinadailyapac.com/article/proposed-guangzhou-hong-kong-knowledge- corridor 5. "Innovation Reinvented -- Six Games that Drive Growth", Miller and Cote, University of Toronto Press, 2012 http://www.cae-acg.ca/documents/Dpliant_Innovation_Reinvented_v4.pdf
  • 32. About the authors: 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 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: gmcconnachie@apicc.asia 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 chairs the Hong Kong Democratic Foundation (www.hkdf.org), 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 (www.apicc.asia) (where he is Director and General Manager), since 2006. Alan Lung Ka-Lun can be contacted at: alanlung@apicc.asia