Innovation for Hong Kong's Upward Social Mobility

51 6.2 Encourage Large Foreign Technology Companies to Settle in Hong Kong 6.2.1 Although the public sector plays a key role in providing sufficient resources to support innovation, in the long run, the engagement of the private sector is equally important to enhancing local innovation capabilities. However, 98% of the private sector in Hong Kong are small and medium-sized enterprises (SMEs) with less than 50 employees, which limits Hong Kong’s innovation capabilities in two ways. 6.2.2 First of all, due to their small scale, SMEs lack internal resources for innovation and R&D (for example, capital, advanced technology), and cannot afford to bear the risks of developing technology and innovation. Second, as pointed out by Ji Peiran from Hong Kong X Tech (interview on 23 November 2020), it is unrealistic for college students to start a business immediately after graduation, and few succeed. Young people usually need to work in large technology companies for a period of time. After they have a certain understanding of the industry, they can start their own businesses to increase their success rate. Unfortunately, there are basically no such large companies in Hong Kong. 6.2.3 Due to the above two reasons, Hong Kong urgently needs to attract large overseas technology companies to set up research centers in Hong Kong, so as to establish and improve Hong Kong’s innovation ecosystem. In this regard, Hong Kong can learn from the policies of countries and regions such as Ireland, Singapore and Israel. 6.2.4 Many of the world’s most innovative and research-intensive small economies attract a large number of multinational companies. These multinational companies account for a large proportion of the local industry’s R&D expenditure and are a catalyst for innovations in host economies. Table 6.1 is a comparison of the performance of Hong Kong, Ireland, Israel, and Singapore in attracting foreign R&D investment. Table 6.2 is a comparison of the above several economies in stimulating R&D investment in R&D centers. 6.2.5 Table 6.1 and Table 6.2 clearly show that Hong Kong is not aggressive enough in attracting overseas technology companies when comparing to Ireland, Israel and Singapore. Existing policies should be reviewed more actively, and the experience of the above economies should be taken into account to attract large overseas technology companies to develop in Hong Kong. 6 Develop Technology and Innovation Industries and Foster Upward Social Mobility