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29 January 2010

The Hong Kong Institution of Engineers (HKIE)
Roundtable Discussion on Development Opportunities of Six Industries Proposed in the Policy Address -
Collaboration and Open Innovation
Among Industry, Academics and Research Institutes
President's Speech (English translation of Chinese speech)

Dear fellow engineers,

Good evening. It is my great honor to be invited to the occasion today. I am grateful to the Hong Kong Institution of Engineers and TechMatrix for giving me this precious opportunity.

Having been back to Hong Kong from the United States for less than five months, I have yet to learn more about the Hong Kong society. Shortly after my inauguration as the President of the Hong Kong University of Science and Technology last year, I was invited to a consultation session on the Chief Executive's Policy Address. I am particularly excited about the fact that the Six Industries mentioned in the Address have close ties to our roles as educationalists in the university.

As a graduate of engineering, I had been engaged in the Mathematics and Engineering disciplines upon graduation, and had taught Computer Science at the Yale University. In those days, Computer Science was part of the School of Science. It is only in the recent years that it became part of Engineering. Many of my schoolmates stayed in Silicon Valley to work for corporations such as Hewlett-Packard, Intel and Google. Today therefore, I am particularly pleased and honored to be in the midst of fellow engineers again.

I had worked in the United States for over 30 years. As you may know, there are a lot of Chinese people working in the information technology industry in the United States, and many of them are from Hong Kong. The IT industry in Hong Kong however, has not been particularly vibrant now or in the past. Although my schoolmates and I were keen to return to Hong Kong from the United States upon graduation, there were few R&D positions available locally. Thus, the birth of the Hong Kong University of Science and Technology in 1991 brought good news to Chinese engineers in North America.

During the past few months in Hong Kong, I have understood that the government department responsible for science in Hong Kong is a relatively small department under the Commerce and Economic Development Bureau.

We recently paid a visit to the Science Park and ASTRI once again as the Nano and Advanced Materials Institute Limited, which was formerly the Nano and Advanced Materials Center hosted by HKUST, set up offices and laboratories in the Science Park. During the visit, I noticed that the infrastructure for R&D in Hong Kong had improved significantly. In fact, many HKUST graduates work in ASTRI. Dr Cheung Nim-kwan, Chief Executive Officer of ASTRI, is in fact my mentor at Caltech.

The Hong Kong society has been reflecting on its finance-focused economic structure and realizing the importance of IT riding on the global IT trend and the financial crises. It was stated in the Policy Address that the six industries to be developed are education services, medical services, testing and certification services, environmental industries, innovation and technology, as well as cultural and creative industries. As the President of HKUST, I am particularly excited to see that many of the items bear significance to us. In the area of innovation and technology in particular, the government will allocate $200 million to launch "R&D Cash Rebate Scheme". Enterprises with the Innovation and Technology Fund or conducting applied R&D projects will enjoy a 10% cash rebate.

These initiatives are good beginnings. However, they are not sufficient. In order for Hong Kong to enjoy a smooth transition to IT and knowledge-based economy, we need long-term strategies and structural changes.

We have to nurture a scientific mentality, an R&D culture, as well as long-term strategies.

First of all, our Institutes, Industries and the Government need to engage in seamless collaboration:

  • Institutes including the universities are responsible for nurturing talents, disseminating knowledge and R&D;
  • Industries are responsible for applying research results to produce scientific products and to develop markets;
  • The role of the Government is extremely important. It is responsible for formulating long-term policies, providing leadership to and liaising with Institutes and Industries, allocating resources appropriately, ensuring seamless integration among the parties, and taking up roles which other parties cannot play properly.

The Institutes, Industries and the Government need to have seamless integration. For instance, research results of the Institutes will be turned into products by the Industries who set up proper production lines. All three parties play important roles which cannot be replaced by others.

Governments of developed countries are aware of the importance of R&D. In the United States for instance, the National Science Foundation is an independent Federal body with supreme status. Its director and members of the board of directors are appointed by the US President and approved by the Senate. Even in the midst of the financial crisis last year, the Obama administration demonstrated its determination for long-term investment in R&D by increasing grants by 50%.

In Hong Kong, we have the Innovation and Technology Commission (ITC), the Applied Science and Technology Research Institute (ASTRI), universities, the Innovation and Technology Fund (ITF), and the Hong Kong Science and Technology Parks etc.

More importantly however, we are in need of a Science Authority. The Science Authority we are suggesting here should be a high-level government body responsible for formulating policies. It will communicate with key decision-makers in the government about the opinions of the industries and the institutes. It will directly communicate with the science authorities of similar levels in other countries and territories. The government needs to foster science and technology from a high level in order to play a leading role.

IT enterprises are developing rapidly on the Mainland, especially in the Pearl River Delta and in Shenzhen which are adjacent to Hong Kong. We at HKUST have close academic collaborations with R&D institutions in Mainland China. To develop long-term strategies in R&D, Hong Kong needs to have a high-level science authority to communicate with Mainland institutions.

As a matter of fact, there are plenty of outstanding talents in Hong Kong. Prof Charles Kao, Nobel Laureate, was educated in Hong Kong. HKUST's School of Engineering is ranked number 26 around the world. Our nanotechnology and other research endeavors have gained global reputation. Our EMBA ranks top of the world, and our MBA is among the world's top 10. Despite these achievements of HKUST, R&D in Hong Kong needs to integrate further with business management in order to achieve the best results.

There are many success stories on R&D, management and industry collaboration at HKUST. Dr Jack Lau, our first PhD graduate, co-founded Perception Digital which developed the award-winning Live-lite and other products. Perception Digital, which has gone public recently, has offices in Hong Kong and Shenzhen. Half of its employees are HKUST graduates who are engaged in R&D. Dr Lau has been awarded the Ten Outstanding Young Persons Award. We have other similar success stories and we hope to witness more.

To ensure seamless integration between R&D and business management, the government needs to play a more important role. Since the business sector focuses on short-term profits, we cannot expect them to take the initiatives to engage in R&D. Rather, it is the role of the government to foster R&D. The government needs to formulate long-term policies and put in resources. The practices of non-interference, small government and big market are not the solutions to developing R&D.

For this reason, many governments heavily invest in R&D. Singapore for instance, has invested US$8.5 billion within four years to develop 17 world-class institutes and types of technology. The Chinese government has doubled IT resources in a decade since the mid 1990s. In the United States, the Obama government increased funding for the National Science foundation in the past year despite the financial crisis, as I just mentioned.

Thomas Friedman, famous author and journalist of the New York Times, said recently at a lecture at HKUST, "If only we could be China for a day". What he meant was that even the Americans, who advocated individualism, sometimes hoped that the government could adopt stronger measures to implement policies more efficiently and effectively. Friedman, the author of The World is Flat, said that the US government should foster the development of ET or Energy Technology in order not to be surpassed by China.

R&D is similar to Energy Technology - it cannot yield immediate profits and it requires heavy investment and long-term policies of the government in order to prosper.

Further to the financial crisis, the governments of many countries and territories are adhering greater emphasis on innovation and technology. The Hong Kong government should do likewise to complement the inadequacies of our economy which has been strongly tilted towards the business sector.

Secondly, we need a vertical chain to provide an end-to-end solution.

The vertical chain encompasses the following:

  • A habitat for R&D: To nurture an R&D culture among universities and industries and to attract local and overseas talents;
  • To ensure that our technologies are in line with market needs
  • The industries should promote applied technology products to users;
  • To encourage Hong Kong people to embrace IT, to enjoy its benefits and to understand that R&D is the important pillar behind a lifestyle with high-tech.

The constituents of the vertical chain should be closely connected. If there are any parts missing, the government should take up those roles immediately. For projects which have strong potentials but which do not guarantee quick profit, the government needs to give a hand such as providing tax benefits.

Thirdly, Hong Kong and the Mainland need to further collaborate to foster R&D and industries in order to develop mutually beneficial relationships.

Is it possible that Hong Kong further utilizes its own strengths and the IT infrastructure in Shenzhen to attract industry investment? Can we encourage industries to set up on R&D base in Hong Kong? Can the Hong Kong government strengthen ties with relevant Mainland government departments to help local R&D institutes?

What are the roles of universities and R&D institutes in enhancing innovation and technology? How can universities contribute to medical services and the environment?

At HKUST for instance, our Entrepreneurship Center and the China Merchants' Group in Shenzhen aspire to set up an incubator in Shenzhen to help students and alumni establish enterprises on the Mainland.

On the other hand, our MBA graduates in Shenzhen have joined, as part of management, IT corporations which are venture capitals under the China Merchants' Group.

It would be beneficial if the Hong Kong government could play a more important role such as liaising with Mainland institutes at the Ministry level or helping local industries meet the challenge of operating businesses across the boundary on the Mainland.

As the President of the Hong Kong University of Science and Technology, I certainly hope that we can play a role and respond to the government's initiatives to support the development of high-tech industries.

We, together with the engineering community, hold the firm belief that Hong Kong can enjoy a smooth transition to knowledge-based society if and only if the government has a genuine and strong commitment to strategically develop R&D with detailed planning.

I look forward to learning about your views. Thank you.


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