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Friday, April 8, 2016, 01:37

Climbing up the value ladder chain

By Oswald Chan
Climbing up the value ladder chain
A view of Hong Kong Science Park. HKSTP has allocated HK$4.4 billion for further expansion to provide an additional floor area of 70,000 square meters for startups and other technology enterprises by 2020. (Parker Zheng / China Daily)

Well Being Digital (WBD) was established three years ago by a group of entrepreneurs with scientific research background and a vision to provide affordable and accurate sensing technologies for wearable devices. The company, an incubatee of Hong Kong Science and Technology Parks Corporation (HKSTP), recently won the “Best Wearable Mobile Technology Award” among four multinational competitors — Intel, Epson, Guess and Motorola.

WBD got off the ground with funding from the Innovation and Technology Fund. HKSTP took in the startup as an incubatee three years ago to help accelerate the company’s research efforts toward commercialization.

Today, WBD employs more than 10 people with scientific background to conduct all its research and development (R&D) work in Hong Kong. Another five employees are based in Shenzhen to help clients conduct the manufacturing process for wearable devices after the company licensed its sensing technologies to them.

WBD, currently valued at HK$100 million ($13 million), prides itself on more than 31 patent innovations relating to all round multiple-sensor technology. It plans to attract venture capital investment this year and in 2017 with the goal of raising more than $20 million.

The company is confident about of its future business prospects and plans to boost its R&D staff strength by up to 30 percent to back up business expansion.

Vitargent (International) Biotechnology — a home-grown biotechnology firm created in March 2011 to provide bio-testing technology and product safety testing for the food, pharmaceutical and cosmetic industries — is already reaping profit and plans to invest more than HK$10 million to lift its research capability and business marketing by hiring 10 new staff.

The company employs 22 people, 14 of whom are engaged in R&D. It has so far secured up to 30 international skin-care and food enterprises as clients, but has yet to find any in Hong Kong.

Jimmy Tao Wai-leung, managing director and chief executive officer of Vitargent, told China Daily the slow commercialization process of advanced technology products is the main obstacle inhibiting the industry’s growth.

“The lack of a strong domestic technology consumption market in Hong Kong has seriously constrained the commercialization process of advanced technology products,” he said. “The Hong Kong government is not doing enough to provide tax credit or cash rebate to boost the industry. It should modify its procurement policy proactively to facilitate the consumption of more local-grown technological products to create local market demand.”

“Hong Kong does not lack talent or capital. What’s deficient here are compelling success stories to convince youngsters they can make huge bucks from R&D activities. All are inter-related. If there’s a strong domestic market to support commercialization, it will, naturally, lure greater flow of talent and capital into the advanced manufacturing sector,” said Tao.

WBD and Vitargent are among 589 technology firms stationed at Hong Kong Science Park, with about 8,100 people actively involved in R&D-related activities. Last year, incubatee and other companies at the complex raised more than HK$300 million — up 50 percent over 2014.

The Hong Kong government is gearing up to reposition the city as an advanced manufacturing center in the region, specializing in upstream activities, such as R&D, design, production and testing, within the upper-end segment of the entire industry’s value chain.

“Hong Kong’s unique advantages in international finance, trade and commerce, coupled with the support from the government and the academic community, can propel the development of advanced manufacturing to make Hong Kong industries more diversified,” Financial Secretary John Tsang Chun-wah said in his 2016-17 Budget speech earlier this year.

“We have identified the three areas of robotics, healthy aging devices and smart city infrastructure to accelerate the commercialization of R&D results, and these high-end value-added manufacturing activities should not be constrained by tight land supply and high labor costs in Hong Kong,” Tsang noted in his blog on March 6.

According to HKSTP Chief Executive Officer Allen Ma Kam-sing, Hong Kong’s manufacturing activities have stagnated in the past two decades. “So, we desperately need to reinvigorate our industrial base by focusing on the high-end manufacturing industry,” he said in February.

“The base for reindustrialization does not depend on brick-and-mortar stores alone because manufacturers can always outsource the low-end manufacturing process to the Pearl River Delta region,” Ma said.

“It really depends on whether the city possesses an adequate talent pool. To build up such a talent pool, Hong Kong must be proactive in attracting more overseas talents and strengthening science and engineering training in our educational system,” he added.

HKSTP will provide support to local small-and-medium-enterprises (SMEs) to support reindustrialization because SMEs form the backbone of the local economy. When local SMEs upgrade their technologies, Ma noted, the reindustrialization process can be fostered.

Professor Wong Kam-fai of the Faculty of Engineering at The Chinese University of Hong Kong (CUHK) said another hindrance is that the SAR’s industrial sector still does not devote adequate resources to develop advanced manufacturing for fear of raking up heavy losses. He argued that this mentality must be changed by offering financial incentives to the sector.

He urged the government to formulate some “key performance indicators” to evaluate the effectiveness of its reindustrialization policy, such as how much advanced manufacturing industries can contribute to Hong Kong’s gross domestic product.

HKSTP will renovate a nine-hectare area at Tseung Kwan O Industrial Estate at a cost of HK$8.2 billion to speed up the growth of advanced manufacturing industries, including robotics and biomedical technology, so as to fuel the development of the entire value chain. The project is due to be completed in the 2021-22 financial year.

The corporation has also allocated HK$4.4 billion for further expansion to provide an additional floor area of 70,000 square meters for startups and other technology enterprises by 2020.

Established in May 2001, HKSTP is a statutory body owned by the Hong Kong government. It comprises Hong Kong Science Park, InnoCentre and three industrial estates in Tai Po, Tseung Kwan O and Yuen Long to promote technical innovation in the city.

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