Generation 40s – 四十世代

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Hong Kong’s ailing film industry can play a leading role in a hi-tech economy

South China Morning Post
CommentInsight & Opinion
2017-03-24

Albert Cheng says the next chief executive should focus on transforming the city into a world leader in virtual reality and a post-production hub, to boost the economy

After three weeks of electioneering to be Hong Kong’s chief executive, Carrie Lam Cheng Yuet-ngor has a comfortable lead ahead of her two opponents in terms of support from the small circle of 1,194 electors – despite being unpopular among ordinary Hongkongers. There is little doubt the former chief secretary will emerge as the winner on Sunday.

However, it would be difficult for her to lead a government when her credibility is low. She can secure enough votes to win, but not the hearts and minds of the people.

If elected, the first thing Lam must do is restore people’s trust. For this, she should focus her attention on one vital subject: the Hong Kong economy. I would advise her to steer public attention back to how to keep the city prosperous. How Hong Kong can ride the global wave of innovation and technology should feature prominently in her first 100 days.

When it comes to innovation and technology, people often think of fintech, start-ups, and research and development. They overlook one important opportunity here: the film industry. In her manifesto, Lam states that in the face of competition, the city “should continue to nurture talents in the film industry by providing training to those involved in film production and post-production, and provide assistance in the further development of the industry”.

This is probably one of the very few issues where I agree with her. The government should invest in the future of Hong Kong by transforming this creative and energetic city into a post-production hub and world leader in virtual reality technology.

Hong Kong has nurtured a critical mass of talent in the film industry over the years. It is a matter of how our leader can unleash this vast potential.

The policy so far has been to invest a relatively small amount of taxpayers’ money to help Hong Kong’s technology firms leap forward. Yet, the logic of a matching fund in collaboration with venture capitalists defies common sense. Once they spot a good movie script, opportunistic investors would rather pocket all the profits, rather than sharing it with the government.

Instead of fumbling around trying to pick winners, Secretary for Innovation and Technology Nicholas Yang Wei-hsiung’s might be better to focus on assisting Hong Kong firms that are already on the right track to climb to the next level.

A scene from the 1987 movie An Autumn’s Tale. starring Chow Yun-fat and Cherie Chung. Hong Kong filmmakers used to produce up to 200 movies a year in the 1980s and 1990s, when the industry was hailed as a pillar of the local economy. Photo: Handout

Hong Kong filmmakers used to produce up to 200 movies a year in the 1980s and 1990s, when the industry was hailed as a pillar of the local economy. However, as its counterparts in Taiwan and the mainland continue to mature, Hong Kong’s creative industry has gone downhill. Virtual reality technology could be the key to help the city turn the tide.

Despite the lack of government support, local entrepreneurs have seized some of the opportunities. Actor Nicholas Tse Ting-fung is a shining example. He launched Post Production Office in 2003 to focus on post-production work for commercials and movies. He branched out in Shanghai and Beijing before selling 60 per cent of the firm to a listed company. However, its Hong Kong operations had to fold mainly because of runaway rentals and high labour costs. The is one of the many budding businesses which ended up moving away from Hong Kong.

The company has now been taken over by Digital Domain, which is chaired by Taiwanese businessman Peter Chou. It is listed on the Hong Kong stock exchange and can be promoted as a success story of our own. Digital Domain is based in the US, with its production studio located in Vancouver. Its special effects expertise is behind many Hollywood blockbusters, including Iron Man 3 and Transformers, to name but two. Many have asked, why Canada? Why not America? Or China? In fact, the answer lies in the local government’s aggressive incentives for investors.

By contrast, the Hong Kong government has been sitting on its hands. The flat, uninspiring ideas in the policy addresses every year are devoid of imagination. The next chief executive must take prompt action. When a good plan is not implemented, it remains at best an idea. Hong Kong can ill afford to let good ideas slip away.

Albert Cheng King-hon is a political commentator.


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How innovative China is beating Facebook, Google and Amazon at their own game

CommentInsight & Opinion
2017-03-21
Niall Ferguson says China, unlike Europe, has shown great economic and political acumen in choosing to challenge the dominance of US internet giants

Only in China could there already be a museum of internet finance. Though most Britons have barely adopted the term “fintech”, online banking is old hat in Beijing.

I toured the museum with its founder, Wang Wei, who delighted in showing me exhibits such as a bitcoin cash machine. The cryptocurrency is eight years old: in today’s China, that’s ancient enough to belong in a glass display case.

Some time soon, Europe needs a similarly designed museum of political idiocy. In its glass cases, I would like to exhibit stuffed specimens of politicians who have so hopelessly failed to understand the information technology revolution that began in California in the 1970s and has now almost completely taken over the world.

Prime candidates for the taxidermist’s knife are the members of the UK’s Commons Home Affairs Committee. They have laid into Google, Facebook and Twitter for not doing enough to censor the web on their behalf. Yvette Cooper, their chairwoman, complained that Facebook had failed to take down a page with the title “Ban Islam”. As she put it: “We need you to do more and to have more social responsibility to protect people.”

Another possible exhibit in the museum of political idiocy is Germany’s justice minister, Heiko Maas, who unveiled a draft law last week that would impose fines of up to 50 million euros (HK$417.6 million) on social networks that failed to delete “hate speech” or “fake news”. He said: “Too little illegal content is being deleted and it’s not being deleted sufficiently quickly.”

If these people want censorship, let them get on with it, but arguing that Google and Facebook should do the censoring is nuts. As if these companies were not already mighty enough, European politicians want to give them the power to limit free expression.

Best of all is the revelation that government advertising has ended up on jihadist and white supremacist websites. The news that London’s Department for International Development and the Metropolitan police have been spending taxpayers’ money in this undiscriminating way just strikes me as more evidence of European naivety.

There are three essential points to understand about the IT revolution. First, it was almost entirely a US-based achievement, albeit with contributions from computer scientists who came to Silicon Valley from all over the world and Asian manufacturers who drove down the costs of hardware.

Most of the big breakthroughs in software that made mass personal computing possible were made in America – think Microsoft and Apple. The internet, too, was made in America. Online retail was made by Amazon, founded in 1994 in Seattle. Online search based on the PageRank algorithm: made by Google, founded in 1996, its first office a garage in Menlo Park, California. Online social networking for one and all: made by Facebook, founded in 2004 at Harvard. YouTube (2005), Twitter (2006), the iPhone (2007), Uber (2009), Snapchat (2011) – you get the idea.

A post on Mark Zuckerberg’s Facebook page shows him running through Tiananmen Square in Beijing, in March last year. Photo: Facebook

Point two: the most important of these companies are now mind-blowingly dominant. In Facebook’s little red book for employees, it is written: “The quick shall inherit the Earth.” Mark Zuckerberg has certainly inherited quite a chunk of this planet. His social network now has 1.23 billion active daily users.

Google and Facebook are predicted to increase their combined share of all digital advertising this year to 60 per cent. Google has 78 per cent of US search advertising. Facebook has 39 per cent of online display advertising.

Third point: this dominance translates into crazy money. Facebook will make US$16 billion from display advertising this year. The business is valued today at about US$400 billion, including a US$30 billion cash pile. That equips Zuckerberg to buy up pretty much whatever comes along that he likes the look of – as he did with Instagram, for example.

It is an amazing state of affairs. Consider the functions these companies perform. Google is essentially a vast global library; it’s where we go to look things up. Amazon is a vast global bazaar, where more and more of us go to shop. And Facebook is a vast global club. The various networking functions these companies perform are not new; it’s just that technology has made the networks both enormous and very fast. The more interesting difference, however, is that in the past libraries and social clubs did not make money from advertising. They were funded out of donations or subscriptions or taxes.

In other words, the truly revolutionary fact is that our global library and our global club are both making money from advertising, and that the more we tell them about ourselves, the more effective the advertising becomes, sending us off to Jeff Bezos’ bazaar with increasing frequency.

Not for nothing is “Fang” the investors’ acronym for Facebook, Amazon, Netflix and Google. These guys really have got their teeth into us.

Confronted with this American network revolution, the rest of the world had two options: capitulate or compete. The Europeans chose the former. You will look in vain for a European search engine, giant online retailer or social network. The US Fang has been well and truly sunk into the EU.

The Chinese, by contrast, opted to compete. By fair means and foul, they made life difficult for the Americans. And they encouraged their own entrepreneurs to build businesses that rival the giants of Silicon Valley. The acronym of the moment in Beijing is “Bat”: Baidu (the biggest search engine), Alibaba (Jack Ma’s answer to Amazon) and Tencent (the nearest thing to Facebook).

These companies are much more than clones of their US counterparts; each has been innovative in its own right. A good example is Tencent’s ubiquitous messaging app

WeChat, which, by using QR codes to allow users to exchange contact details, is fast destroying the business card.

Needless to say, Silicon Valley gnashes its fangs at being shut out of the vast Chinese market. Zuckerberg has not yet given up hope, doing interviews in Putonghua and even jogging through the smog of Tiananmen Square. The recent experience of Uber cannot encourage him. Last year, it ran up the white flag in China, accepting that it could not beat the homegrown ride-sharing business Didi Chuxing. Cue more gnashing.

I have to say I admire how China took on Silicon Valley and won. It was not only smart economically but smart politically, too. Beijing now has the big data it needs to keep very close tabs on Chinese netizens. And good luck to the US National Security Agency as it tries to get through the Great Firewall of China.

Museums are where history’s victors display their trophies. What I learnt last week is that China may be winning the latest battle in the IT wars: to take not just banking but money itself online.

Niall Ferguson is a senior fellow of the Hoover Institution, Stanford


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Hong Kong has a stake in the birth of a Greater Bay Area in China’s south

CommentInsight & Opinion
2017-03-09
Sonny Lo says Beijing’s commitment to foster regional integration in southern China is clear. With plans already afoot, it’s up to Hong Kong to play its role well, alongside Guangdong and Macau

The most important Hong Kong-related part of Premier Li Keqiang’s ( 李克強 ) annual work report delivered at the National People’s Congress last Sunday is arguably the idea of a Greater Bay Area for Guangdong, Hong Kong and Macau.

A day after he spoke about it, Guangdong governor Ma Xingrui (馬興瑞) expressed hope that the Dawan area (literally, “big bay area”) should not only be comparable to New York, Los Angeles and other coastal economies, but also have a way of coordinating regional differences in tax systems and transport networks.

Echoing Ma, the Guangdong Development and Reform Commission director He Ningka (何寧卡) called for a concrete blueprint for deeper integration, which would involve strengthening infrastructure networks to enhance interaction and spur innovation; consolidating trade relations to support“One Belt, One Road”; and creating high-quality, environmentally friendly cities where people live and work.

The idea of a Greater Bay Area is not new. The mainland government has, in recent years, sought the deeper integration of Hong Kong and Macau into southern China. In the nation’s 12th five-year plan, for example, the government urged the two cities to promote coordinated growth and “develop a world-class metropolitan cluster”.

Most recently in the 13th five-year plan, unveiled last year, Hong Kong was designated a global offshore renminbi business hub, and expected to further promote its professional and financial services. The main idea is to make it a regional hub by not only strengthening its cooperation with the development areas of Qianhai, Nansha and Hengqin on the mainland, but also playing a more active role in Beijing’s belt and road initiative.

For now, while Hong Kong is fostering deeper integration with Shenzhen’s Qianhai, Macau is doing the same with regard to Hengqin. The recent agreement by Hong Kong and Shenzhen to develop the Lok Ma Chau Loop into an innovation and technology park represents genuine efforts at deeper integration.

The entire thrust of the integration blueprint reflects China’s development strategy for its south. Guangdong is expected to be the locomotive for the region. The fact that a 2009 cooperative outline for the Pearl River Delta area, in one early mention of regional integration, came from a Guangdong think tank was illustrative of the province’s leadership role.

Similarly, the remarks made by governor Ma immediately after Premier Li’s report indicated Guangdong’s pivotal role in the central government’s planning strategy.

To stay competitive, Hong Kong and Macau must reposition themselves to adapt to Beijing’s plan.

First, they should review their population and education policies to welcome mainland talent and high-quality immigrants, as well as nurture more scientists and technology experts.

Both cities should also build on their strengths – Hong Kong as a monetary and financial hub, and Macau as a diversified tourism hub. Macau’s recent moves to diversify its economy – away from the casino business towards theme parks and golf resort development in neighbouring Henqin – is illustrative of Beijing’s planning. Macau is expected to play a crucial bridge between China and other Portuguese-speaking countries, just as Hong Kong should utilise its common-law heritage to expand its connections with many other countries in the world.

The two special administrative regions are endowed with sound legal systems and strong rule of law, which will enable both to remain competitive in the coming years. But Hong Kong and Macau must train more local people to better understand mainland China, including in the areas of history, law, politics, economy, education and cultural values.

In the face of these developments, the “one country, two systems” framework is likely to develop into a new system in Hong Kong by 2047 and in Macau by 2049, when a new region of economic integration is likely to be formed.

Sonny Lo is a political commentator


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Hong Hong needs to join the world of the truly modern entrepreneur – and the government isn’t helping

South China Morning Post
Business
2017-01-20

Unless they make a serious commitment that represents broad industrial policy, government will be limited to staging conventions that sound like tourism promotions

This is a time of great change, upheaval of norms and establishment status quo dissolution.

But there’s one steadfast member of the elite that the world can rely on to never change, no matter how the facts around it change: and that’s the Hong Kong government.

One of the nightmares of being an entrepreneur here is that you are always haunted by the idea that you’re wasting your life away.

And so the StartmeupHK Festival 2017, which ends Friday, has been a valiant attempt to move Hong Kong off its traditional and long-worn economic moorings.

I don’t doubt the sincerity of all the panellists, speakers and organisers – but as many of the enthusiastic networking policymakers said, we need to contemplate if they can make a serious commitment that represents broad industrial policy, otherwise, government will be limited to staging conventions that sound like tourism promotions.

It will join the ephemeral wake comprising the wine, Chinese medicine and tech “hubs” that the government has conjured up to show the world how trendy Hong Kong can be.

Some naïve misconceptions held by budding local entrepreneurs need to be cleared up.

No, start-up and angel funding isn’t supposed to pay for a comfortable market level salary and cover your rent. You can ask your VCs for salaries after you achieve key milestones, such as completing and shipping product or even better, generating revenues.

Learn how to write a realistic business and go-to-market plan. Yes, you are supposed to suffer for your art.

Asking people for money is the hardest thing to do. But, it is the essence of business.

Too many young people think raising money is like pushing buttons on an ATM. The most frustrating part of advising young entrepreneurs is that they don’t listen to advice. They waste far too much time engrossed by what they think is something special and shiny. Instead, they realise that ideas aren’t special. Being able to execute ideas in a business plan is far more important.

Beyond the policy recommendations I have made in previous columns, and assuming this city’s government actually wants to move its economy beyond property speculation, it needs to forcefully create an industrial policy that encompasses a broad range of innovation and entrepreneurship.

Livana Young Yuen-yi attends media pitching day for the ‘Mother Entrepreneurs’ event held last year in Kwun Tong. Peter Guy insists a lot more should be done to encourage the city to reinvent itself as a modern entrepreneurial hub. Photo: Edward WongThis requires an understanding of innovation as a process that can be replicated consistently by both institutions and groups – that’s a lot more than the randomness of betting on start-ups.

Being an entrepreneur can be a cruel, frightening and painful experience. You have to believe in yourself in a way that is almost alien to people who decide to be mere employees. Not all business owners are entrepreneurs.

An entrepreneur requires special characteristics. They care about something different above owning their own business. They seek to change or transmute value not seen by others.

Hong Kong’s enduring myth is that its economy is built by entrepreneurs. But, the reality is they are independent businesses. An independent business person is not the same as an entrepreneur. Starting McDonald’s in 1955 and inventing process repetition, control and efficiency into fast food that changed the entire restaurant industry, was an innovation vastly different than opening a won ton noodle cafe.

While one brought radical change to a traditional industry, the others regurgitate the kind of derivative repetition of ideas that Hong Kong cannot seem to escape.

It explains why it is easier to raise millions to open a restaurant than a tech startup in this city despite being overcrowded with copycat restaurant groups who are unwitting serfs to greedy landlords.

Hong Kong must overcome the dilemma posed by China. Despite protectionist, restrictive laws and aggressive censorship, China has evolved into a globally attractive and significant technology market. It may also be viewed as a marginally more attractive place to live than China, but for innovation and entrepreneurship you have to be located in China to understand and penetrate the market.

China has demonstrated that unrestricted individual freedom of thought (as defined in the west) is not an absolute necessity for innovation.

While pure, subversive and radical innovation is not possible, China has shown that commercialisation of western technology for domestic consumption can spawn massive enterprises that serve huge market segments.

By posing and truncating itself as a technology “gateway” or “superconnector”, Hong Kong actually surrenders and trades away much of the recurring benefits of its vast industrial development.

The source of value and power in technology comes from owning intellectual property, not acting as a facilitator of coffee club gatherings.


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Hong Kong needs a tech upgrade to diversify its ailing economy

South China Morning Post
Comment›Insight & Opinion
2016-01-12

Winnie Tang

Winnie Tang says the government should use the upcoming policy address and budget to turn Hong Kong into a smarter city, boost IT education and create more favourable conditions for entrepreneurs, for starters

The public consultation on retirement protection has attracted overwhelming social attention. A reliable and balanced retirement scheme is important to our society, but equally crucial is the government’s technology drive for a better economy. In this way, Hong Kong will be better equipped to face a host of challenges. As an advocate of Hong Kong’s information technology development, I have some suggestions for the upcoming policy address and budget.

First, Hong Kong needs to be a smarter city. Singapore and some mainland cities picked up top awards in the region recently with their outstanding smart city initiatives. Together with Seoul, these emerging smart cities have demonstrated how new developments can lift residents’ quality of life. The government should therefore extend the pilot Kowloon East smart city scheme to cover the whole of Hong Kong.

Meanwhile, the government should seek to integrate all related information, on city planning, transport, medical, commerce and logistics, to better co-ordinate and manage the planning, construction and operation of Hong Kong as a smart city.

Second, we can create a greener world through the internet. While nations agreed at the UN climate summit in Paris to cut greenhouse gas emissions, the success of the accord relies on the co-operation of governments and communities. At the same time, Paris is ambitiously increasing the greening of the city following an online poll in 2015; one million square metres of roof and building facade greening will be installed by 2020. The “gardens on the walls” initiative aims to achieve a better climate, cleaner air and biological diversity. We should adopt something similar.

Third, we can create a better future for our ageing population through e-health initiatives. Savings of 10 to 20 per cent can be achieved on total health care costs through e-health such as telemedicine (diagnosis and treatment from a distance) and the use of mobile devices (providing health care information to practitioners and real-time monitoring of patients’ vitals). This would help ease the increasing financial burden.

Fourth, IT education needs to be updated. Although 80 per cent of Hong Kong households have internet access, the education sector has not been keeping pace with the speed of change in the digital age – the syllabus that sets out computer literacy requirements for junior secondary school students was last updated 14 years ago.

According to US government statistics, by 2020, there will be 1.4 million computing jobs and only 400,000 students with relevant training to fill those roles. Moreover, computer science skills, such as coding, have become essential in many different fields. This is a global phenomenon.

Britain now includes coding as a compulsory subject for children as young as five while Finland will also make it a mandatory, cross-curricular activity from the first year of school, starting from this autumn. Australia and Singapore, too, are contemplating when and how to start compulsory education in coding.

To avoid being left behind, the government should incorporate computer programming as a compulsory subject in primary education to equip students for the future digital world, and stimulate them in logical thinking and problem solving.

Finally, in almost every corner of Hong Kong, you’ll find people starting businesses. The government should spare no effort to create favourable conditions to strengthen the entrepreneurial ecosystem.

It should maximise the use of existing public resources, seek to attract more overseas business incubators, accelerators and venture capital, while doing more to enable office space sharing.

Regulations need to be revised on raising contributions through the internet, such as by using equity crowdfunding and mobile payments. Regulatory reform would benefit not only start-ups but also investors, with the result of boosting the market.

Innovation and technology can diversify Hong Kong’s economy and provide greater employment opportunities for the community.

Dr Winnie Tang is co-founder and chairman of the Steering Committee of the Smart City Consortium