Thoughts On Future Value: Opportunities For Hong Kong.

World Scene.

As 2011 dawns and we enter deeper into the second decade of the 21st century, we may draw significant learning from the past decade which can help us create more sustainable value in the future.

There is no question that the globalisation of business has accelerated and that our economy is developing into a balanced mixed economy in which the agrarian, industrial and knowledge economies complement one another.

It is also clear that on a world scale we have narrowly escaped a serious economic depression and that it will take quite a few years for some nations to clear the severe debt which they have accepted in order to preserve a functioning world monetary system.

Companies of all industry sectors from SME to multinational corporations now compete in an environment which is harsher and more competitive: funding is a serious issue as banks struggle to regain performance. Many today hold the opinion that the bail out of the banking system is taking place at the expense of service to business.

In seizing opportunities today businesses need to be more agile in maximizing the power within their hard assets, structural knowledge capital and people, and require to function in teams which go far beyond their company structures.

How well prepared are most companies to function in this new environment?

Some Countries have Made a Start.

Among the countries which have made a start, Japan, Scotland, Singapore and Syria have taken the lead in deciding that there is a need to provide support to companies, particularly SME companies, so that they understand the opportunities provided by the modern economy. In each case a set of business support services has been put in place designed to provide instruction to companies and ease the way in which initial financing is obtained.

Japan as a highly developed high cost economy is placing emphasis on Intellectual Asset based Management (IAbM). Beginning in 2005, the Japanese Ministry of Economy, Trade and Industry (METI)[1] promoted discussion of how to accurately understand unique strengths which enterprises have cultivated until today (intellectual assets) and effectively combine them to create value (intellectual asset-based management). This resulted in the distribution of the “Intellectual Asset-Based Management Manual for Small and Medium Enterprises” in 2007. The need for financial institutions to better understand and include intellectual assets in analysing funding provisions was flagged up and is being addressed. METI continues to support this programme and imbed it in the SME community.

Scotland, a remote developed economy on the north western fringe of Europe, identified a significant market failure: excellent university R&D but very limited conversion of this invention into the creation of new, innovative Scottish companies. The already excellent support to companies provided by Scottish Enterprise[2] was augmented in 2002 by the creation of ITI Scotland . In its own words ITI Scotland[3] states that “there is nothing conventional about our model. Rather than funding ‘blue-sky’ research or making grants to SMEs that are already in existence, we go one step further and seek to anticipate the market through pre-competitive research. We do not simply review a proposal, award funding and then wait for results. We identify future global markets and then fund the research and development to meet future demand in that market. Our role is to provide hands-on support in the process of innovation at the earliest point possible, at the pre-competitive stage, thus improving Scotland’s record for innovative research. We then manage the resulting intellectual assets in a way that best supports Scottish economic development. Our substantial funding and initial ten year horizon give us an unusually long-term perspective and the freedom to focus on the future benefit of our programmes to the growing knowledge economy. Each of the three operating divisions, based in Glasgow, Dundee and Aberdeen, employs a team of between 15 and 20 people, with complementary experience in early stage research, technology development, intellectual asset management, technology marketing, deal-making, and company formation and development.” ITI Scotland was absorbed into the core activities of Scottish Enterprise in January 2009.

During the formation of ITI Scotland it became clear that there was a need for awareness raising and a mentoring programme in Scotland for SME companies on the extraction of value from their intellectual assets. In response the Scottish IA Centre was created in 2003. “Supported by the Scottish Government, the Centre was developed in response to the demand from businesses to learn more about their IA. Initial studies showed that, despite the number of businesses asking for advice, there were still many more that were not aware. Moreover, the value of unexploited IA within Scottish companies was judged to be several billion pounds!”[4]

Together Scottish Enterprise and its sister organization Highlands and Islands Enterprise[5] for Highland Scotland, along with ITI Scotland and the Scottish IA Centre are providing a solid base for economic development in Scotland into the knowledge rich economy.

Singapore, as a high technology based, small and densly populated island state in South East Asia, has embraced the knowledge rich economy as one of the stepping stones to success. The economic development support provided for inward investment by EDB Singapore[6] and for overseas investment by IE Singapore[7] have been augmented by the creation of the Singapore IP Academy which “aims to be a leading centre of excellence for executive IP education & thought leadership development, and to be a world-class resource for the development of knowledge and capabilities in the protection, exploitation and management of IP.”[8] This support network is providing systematic education and support to companies in Singapore, one of the most successful knowledge rich cities in the world.

Syria, as a developing economy in the Middle East, has undergone a significant transition following the full opening of its markets to international trade and competition in recent years. In order to provide support to local companies, the Syrian Enterprise Business Centre (SEBC) has been formed as a Syrian government enterprise: SEBC grew out of an earlier European funded Syrian European Business Centre. SEBC, headquartered in Damascus, is an “implementation agency for projects aimed at developing the private sector in general, and SME support & development in particular. In other words, SEBC is the catalyst institution for private sector development and growth in Syria.”[9] The catalytic steps made through the intervention of SEBC, including IC Management, have had significant effects on the development of Syrian enterprises.

Future Opportunities for Hong Kong SAR, China.

A highly successful past has today endowed Hong Kong with an amazing advantage as the bridge between China, The ASEAN Nations and the Rest of the World. However, this past is based on manufacturing, property, financial services and the trading of goods: this will not be enough to ensure success for Hong Kong in the modern economy.

As the Honourable Samson Tam, Legislative Councilor for the IT Sector in Hong Kong said recently[10], it is logical that Hong Kong strives to become one of the leading world centres for the trading of knowledge: this skill has a complementarity with the traditional skills which have given Hong Kong such a prominent position in the world.

In order to be a hub for trading knowledge, for technology transfer and a world centre of expertise in intellectual capital, which is the driver of knowledge organisations, it is necessary for Hong Kong to move forward to the next level, just as Singapore has been so successful in doing time after time through the past 50 years.

The Intellectual Capital Management Consultancy Programme[11] of the Intellectual Property Department of the Hong Kong SAR Government is a laudable beginning which must be supported and expanded, but it can only be a beginning.

An outreach is now needed to companies, most of which are SMEs, in Hong Kong to provide them with the tools and face-to-face support not only to understand the opportunities and threats associated with the knowledge rich economy but also to act upon them. A combination of awareness raising, diagnosis, consultancy and support backed up by industry focus groups is the next logical stage.

The Asia Pacific IC Centre is one of the organisations in Hong Kong which is committed to supporting those who chose to begin to make this journey towards realising the value nascent within companies and society in Hong Kong SAR, China.

[10]Samson Tam, Legislative Councilor of the IT Sector, speech delivered to the Hong Kong Democratic Foundation on 26 November 2010 published as “Trader of Ideas”, 3rd December 2010, South China Morning Post, Page A19.