Inno-tech potential

The Greater Bay Area has become an important agglomeration of the nation's innovation resources, with the Chinese mainland ranking 14th and Hong Kong 11th worldwide, according to the Global Innovation Index 2020 published by the World Intellectual Property Organization. The top 100 global innovation clusters include 17 innovation regions on the mainland, with the Shenzhen-Hong Kong-Guangzhou innovation cluster ranking second.

According to the Global Innovation Index, China's global ranking in innovation has risen from 35th in 2013 to 12th in 2021, making the nation the highest-ranked upper middle-income economy.

"Hong Kong's innovation and technology sector is emerging and rising quite rapidly, with one-third of the startups coming from outside of Hong Kong, indicating the city's strong attraction for budding enterprises," Yau says.

"We are seeing very handsome growth of the mainland's economy in areas like innovation and technology. And the Greater Bay Area is, in fact, a very strong cluster of innovation and technology, where it can leverage Hong Kong's advantage as an international innovation and technology hub and use the city to raise funds and facilitate deeper research collaboration and connect with the world."

According to Yau, the Greater Bay Area has the best ecosystem for both traditional and new industries, aided by a strong manufacturing base, as well as its innovation and technology strengths.

The latest statistics released by the Guangdong provincial authorities and the Hong Kong and Macao special administrative regions show that the Greater Bay Area's total population exceeded 86 million last year, with a combined GDP of $1.67 trillion.

"The 11-city cluster's population, efficiently linked by urban traffic and the high-speed railway, lends itself to be a very strong economic entity. The 86 million people also have the highest earnings and savings power in the nation," Yau says.

"The biggest challenge is how to make the Greater Bay Area ecology open to the widest world possible on a level playing field, attracting the best talents and also economic input to make it a global economic center. There are still plenty of hurdles to overcome to better integrate the flow of capital, people and technology, and strengthen synergy."

Many international enterprises have set foot in the Greater Bay Area, but it may not be easy for some small startups or small and medium-sized companies to reap the region's full potential.

As the bedrock of Hong Kong's economy, SMEs account for 98 percent of enterprises operating in the city and employ 45 percent of the workforce in the private sector.

The Commerce and Economic Development Bureau has a special program to provide funding through the Trade Development Council, specifically to help SMEs obtain commercial loans and explore new markets. It also provides business information and technical advice through the Trade and Industry Department and other government-subvented organizations.

Despite the pandemic's impact on Hong Kong's economy, a survey by the SAR government's direct investment promotion agency InvestHK shows that more start-ups have begun operations in the "Pearl of the Orient", reflecting the city's continued business appeal.

Foreign direct investment has not stopped because of the pandemic. Instead, it has reached new heights, with Hong Kong ranking third globally in terms of FDI destinations last year, Yau says.

Total inward and outward direct investments reached HK$15.88 trillion and HK$16.42 trillion by the end of 2020, equivalent to 591 percent and 611 percent of the city's GDP, respectively, according to the Census and Statistics Department.

Hong Kong has a highly internationalized and rule-of-law business environment and a worldwide business network, making it one of the freest economies in the world and the best place for foreign companies to expand their business to the mainland.

"Money has been flowing into Hong Kong, partly due to the various connect schemes we have rolled out in the past few years," Yau says.

The Ministry of Commerce says the Chinese mainland became the world's largest source of FDI for the first time last year, with total FDI reaching $153.7 billion - an annual increase of 12.3 percent. During the same period, 58 percent of the mainland's FDI was channeled through Hong Kong, mostly using Hong Kong's business platform as a springboard to Asia and other overseas destinations.

Oswald Chan contributed to this story.