Over the past 20 years, Hong Kong native Tung Mowling has built his software company into a juggernaut that provides customized investment-banking platforms for customers like Citicorp and the Bank of China. Despite his success, Tung is dismayed to admit that he's still somewhat unknown.
His relative anonymity is a sign of how tenaciously Hong Kong has clung to Adam Smith-style free-market capitalism, even as other Asian governments aggressively rev up their high-tech industries.
"If a company like ours was in Singapore," Tung says, "the government would promote us by highlighting the fact that we have all these world-class clients."
High-tech firms like Tung's want the government to abandon its loyalty to the invisible hand and work more to promote a new wave of entrepreneurs. These new interventionists appear to have substantial support among the officials who will be running Hong Kong after 30 June.
Changing the 'non-interference' policy
Chief executive-designate Tung Chee-hwa has said he backs "a new industrial direction," asserting that "a non-interference policy would not meet the needs and strengthen the competitiveness" of Hong Kong.
The calls for a more active government role in supporting business come at a time when the city's economy is in transition. Information technology is on the rise, and low-end manufacturing has moved to China. Financial and trading service dominate the city's gross product.
"We can't just base our economy on the services sector," said James Liu, who runs the Hong Kong Industrial Technology Centre, which houses a cluster of local high-tech firms. The effort is one of the few government initiatives to support info-tech. "It's too risky not to have a balanced economy. We have to create something new that matches the economic status that Hong Kong has today."
Hong Kong's big problem in the info-tech sector is that plenty of Asian competitors, working closely with their governments, are far ahead in the production of semiconductors, disk drives, and computer hardware. Hong Kong's growth will likely come from the multimedia and software sectors, but local businesspeople worry that without an assist from government they face an unfair fight.
"Hong Kong is really falling behind areas such as Taiwan, Singapore, and even Malaysia in the area of information technology. It is no longer sufficient for the government to take a hands-off policy," said Cyrus Hui, a venture capitalist who runs a local ISP.
Few solutions proffered
Though Hui and others call for more government action, they usually fall silent when asked what precise steps they want the authorities to take.
"Both the government and business recently have been making a lot of noise about the government doing more, but I think they are still trying to figure out how they should proceed," said Simon Kwan, business manager for a start-up software company called GPS Services.
A few modest proposals have surfaced, and they suggest that Hong Kong won't stray too far from its laissez-faire path. One idea is tax incentives for companies that invest in research and development. Hong Kong currently puts only 0.1 percent of its gross domestic product into research, less than one-twentieth the spending level of economic powers like the United States and Japan.
Nasdaq, HK-style?
The industry would also like to see a new Nasdaq-style stock market that would give start-up tech companies a chance for financing. Cash is hard to come by in a city with many other rich investment opportunities.
"People tend to think the return will be much larger and faster if they invest in stocks or property," said Diana Cheung, general manager of Prima Design Systems, which produces CAD systems for garment design. "It's quite difficult to get investments."
Another obstacle for local hi-tech firms is attracting top talent. The Hong Kong education system is under fire for producing sub-par graduates, and high housing prices make it expensive to import brain power.
Reunification might provide a boost by giving readier access to China's talent pool.
"In China they have a lot of good people in things like mathematics and IT," said Tung Mowling. "We have more exposure, project management expertise, and better use of English, as well as a lot of customers who believe in us. The important question is how we should get together with the Chinese."
One model for Hong Kong companies might be Motorola's locally designed Dragonball chip, which allows Chinese-language paging. The technology, now a global standard, was developed from a model conceived in Beijing's Qinghua University.
"Chinese firms may have a chance to work closely with Hong Kong companies and take advantage of the stronger marketing skills here," said K. T. Yung, the general manager of the computer services division for the Productivity Council, a quasi-government body that encourages local companies to adopt technology. "And Hong Kong companies are interested in working with mainland companies to tap into the Chinese market. The transition will certainly play a significant role for the future development of the Hong Kong information technology industry."
Wired News correspondents Greg Chang and Saidah Said write for Dataphile, a print and online cyberculture magazine in Hong Kong.
