Hong Kong needs to de­velop a bal­anced view of in­no­va­tion

China Daily (Hong Kong) - - COMMENT - NAU BA H A R S H A R I F

Re­cently sev­eral writ­ers in these col­umns have called for Hong Kong to catch up with com­pa­ra­ble economies in terms of re­search and de­vel­op­ment (R&D) ca­pa­bil­i­ties — the means by which firms bring in­no­va­tive new prod­ucts to global mar­kets. In­deed one writer, Pro­fes­sor Ray­mond So, ar­gued re­cently that “Hong Kong needs more in­no­va­tion to re­main in­ter­na­tion­ally com­pet­i­tive”. So ob­served that Hong Kong lags be­hind in two ma­jor in­ter­na­tional com­pet­i­tive­ness rank­ings in the area of in­no­va­tion.

As a pro­fes­sor spe­cial­iz­ing in sci­ence, tech­nol­ogy and in­no­va­tion stud­ies, I re­mind my stu­dents to main­tain a bal­anced view of in­no­va­tion, par­tic­u­larly as it oc­curs in Hong Kong. While some of the news about in­no­va­tion in Hong Kong is less than in­spir­ing, some is en­cour­ag­ing.

There is no deny­ing Hong Kong’s lack­lus­ter per­for­mance in an­nual R&D spend­ing (as a per­cent­age of GDP). By some mea­sures Hong Kong is very much a lag­gard, es­pe­cially com­pared with neigh­bor­ing East Asian economies. Tai­wan, South Korea and Sin­ga­pore, for ex­am­ple, an­nu­ally spend roughly three to six times as much on R&D as Hong Kong.

In terms of R&D in­ten­sity, Hong Kong more closely re­sem­bles the likes of Malaysia, Thai­land and Viet­nam. How­ever we mea­sure R&D, some an­a­lysts ar­gue that Hong Kong is not a coun­try, so it is un­fair to com­pare it with coun­tries that spend sig­nif­i­cant amounts on their mil­i­tary sec­tors, which typ­i­cally in­clude a size­able R&D com­po­nent. This is ab­so­lutely true.

How, then, does Hong Kong com­pare in an­nual R&D ex­pen­di­tures, which amount here to 0.74 per­cent of GDP, with other ci­ties? Con­sider the an­nual R&D ex­pen­di­tures as a per­cent­age of GDP of sev­eral ma­jor Chi­nese main­land ci­ties in the most re­cent year for which sta­tis­tics are avail­able: Bei­jing, 5.95 per­cent; Shen­zhen, 3.68 per­cent; Shang­hai, 3.66 per­cent; Hangzhou, 2.98 per­cent; Tian­jin, 2.95 per­cent; Foshan, 2.46 per­cent; Chongqing, 1.42 per­cent: and Guangzhou, 1.25 per­cent.

As these fig­ures demon­strate, even when com­par­ing ap­ples with ap­ples, Hong Kong fares poorly.

So far I’ve been dis­cussing R&D ex­pen­di­tures, but I have men­tioned in­no­va­tive prod­ucts as an out­put of R&D. What, then, is in­no­va­tion? As nat­u­ral as it might seem to mea­sure in­no­va­tion by R&D ac­tiv­i­ties, there is much more to it.

Per­haps the best in­for­mal way to un­der­stand in­no­va­tion would be to think of it sim­ply as “do­ing some­thing new”. Do­ing some­thing new re­quires new knowl­edge. Some­times — but not al­ways (and this is an im­por­tant point) — do­ing some­thing new also re­quires for­mal R&D. Cru­cially, though, there are le­git­i­mate forms of in­no­va­tion that do not re­quire for­mal sci­ence or tech­nol­ogy spend­ing on lab­o­ra­to­ry­based R&D.

Con­sid­er­ing Hong Kong’s his­tory — as mul­ti­ple au­thors in these col­umns have ar­gued — Hong Kong has al­ways been an ex­tremely in­no­va­tive place. There is no other way to ex­plain how it has pros­pered so quickly. How­ever, in­no­va­tion in Hong Kong has man­i­fested in ways that for­mal R&D sta­tis­tics do not cap­ture. Be­yond sci­en­tific and tech­no­log­i­cal R&D, there are other as­pects of in­no­va­tion in which Hong Kong has es­tab­lished a strong tra­di­tion, prof­ited from it and de­vel­oped use­ful ca­pac­i­ties.

These ca­pac­i­ties in­clude: The au­thor is an as­so­ciate pro­fes­sor of so­cial sci­ence at the Hong Kong Univer­sity of Sci­ence and Tech­nol­ogy.

While I agree that Hong Kong can be even more com­pet­i­tive in global mar­kets by up­grad­ing its sci­en­tific and tech­no­log­i­cal ca­pa­bil­i­ties ... We must not ne­glect non-sci­en­tific and non­tech­no­log­i­cal in­no­va­tion.”

· Ab­sorb­ing global knowl­edge, adapt­ing tech­nol­ogy, and re­com­bin­ing and syn­the­siz­ing knowl­edge into new pro­duc­tive con­fig­u­ra­tions;

· Re­ly­ing on ag­ile sen­si­tiv­ity to chang­ing de­mand to learn quickly from ad­vanced cus­tomers and mar­kets through cre­ative im­i­ta­tion;

· De­ploy­ing or­ga­ni­za­tional flex­i­bil­ity and or­ches­trat­ing loosely cou­pled net­works and busi­ness pro­cesses; · Sys­tem­at­i­cally devel­op­ing qual­ity con­trol. If Hong Kong’s strength lies in pur­su­ing non-tech­no­log­i­cal in­no­va­tion, then, why should it in­crease R&D spend­ing on tech­no­log­i­cal in­no­va­tion? Well, as Hong Kong tran­si­tions into a knowl­edge-based econ­omy — the best way to en­sure con­tin­ued eco­nomic growth in the 21st cen­tury — it ab­so­lutely must em­pha­size var­i­ous forms of knowl­edge, of which tech­no­log­i­cal R&D is an ex­tremely crit­i­cal com­po­nent. The goal is not, of course, to turn Hong Kong into yet an­other Sil­i­con Val­ley, but sim­ply to ex­pand the eco­nomic base be­yond its four pil­lar in­dus­tries of fi­nan­cial ser­vices, trad­ing and lo­gis­tics, tourism, and pro­ducer and pro­fes­sional ser­vices. That is the key to con­tin­ued growth and de­vel­op­ment.

Still, many in­di­vid­u­als, groups and com­pa­nies in Hong Kong en­gage in non-R&D-re­lated in­no­va­tive ac­tiv­i­ties that add value, move the econ­omy up the value chain, in­crease com­pet­i­tive­ness and con­trib­ute to ris­ing em­ploy­ment. This is Hong Kong’s strength, how­ever dif­fi­cult to mea­sure it might be, and Hong Kong should con­tinue such ac­tiv­i­ties in con­junc­tion with grow­ing new, for­mal tech­no­log­i­cal R&D ca­pa­bil­i­ties.

There­fore, while I agree that Hong Kong can be even more com­pet­i­tive in global mar­kets by up­grad­ing its sci­en­tific and tech­no­log­i­cal ca­pa­bil­i­ties (and its stel­lar univer­sity sys­tem can help fuel this ef­fort), we must not ne­glect non-sci­en­tific and non-tech­no­log­i­cal in­no­va­tion — pre­cisely the type of in­no­va­tion that Hong Kong has lever­aged to great ef­fect over the past sev­eral decades.

Com­bined ef­forts on both fronts will gen­er­ate a real im­prove­ment in Hong Kong’s in­no­va­tive ca­pa­bil­i­ties.

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