Technology transfer in Asia

China could prove to be an excellent market for Canada’s high tech success stories, and leveraging the progressive intellectual capital available in Hong Kong could be the key to success.

By Artie Ng, CMA, and Anthony Tam, CMA, FCMA

During his recent visit to Canada, the Chief Executive of Hong Kong, Donald Tsang, engaged Canada’s business community, introducing them to a new era of business opportunities in the Pearl River Delta. He stressed the values that Hong Kong can offer to companies interested in investing in China. Perhaps more importantly, he noted the recent emphasis by this special administrative region on the protection of intellectual property rights, and the enforcement of such rights. He rightly remarked that Hong Kong was the first jurisdiction in the world to successfully prosecute illegal distribution of copyright-protected material on the Internet.

Canadians interested in entering the Chinese market can find much benefit still from starting in Hong Kong.

Technology transfer 

In the current global business environment, Canadian innovations can only gain from finding a larger target market — the rapidly growing consumer markets of China. Canada has an international reputation as a country that encourages advancements in science and technology, nurturing a number of high technology companies into profitability. In the field of wireless technology, biotechnology and renewable energy, Canadian technology-based companies have demonstrated their strength in technological innovation and effectiveness in research and development for new products and services. These new products and services, which incurred significant research and development expenditures, could be further rationalized with an overseas market of critical mass and extensive commercialization. 

We are seeing a trend in China of consumers that are increasingly health-conscious and concerned about environmental protection. Advanced Canadian technologies would provide timely and proven solutions for some of these concerns.  However, the underlying business exposure for science and technology-intensive companies when entering an emerging market are concerns about the potential infringement of intellectual property rights for valuable intangible assets. While the existence of a comparable legal system is critical, effective enforcement is even more significant.

The human capital advantage

One essential element that Chief Executive Tsang did not, perhaps, address specifically in his address to the Canadian business community is the unique human and intellectual capital available in Hong Kong. To support the development of international enterprises in China, Hong Kong has cultivated an unique human capital pool. Through decades of economic development and in its role as one of the most important financial and trade gateways to Asia, Hong Kong has a unique conglomeration of individuals who have worked and been educated in developed economies, either returning to or settling for the first time in Hong Kong as successful business people — a heterogeneous resource that develops and operates the legal and financial systems of this administrative region.

Post 1997, the critical timeline for political change in the post-handover era, international professionals with diverse international living and work experience from overseas have either remained or have returned to this city. The CMA chapter in Hong Kong, for instance, has approximately 300 certified members working and living in the city. These professionals are serving in various roles, including senior managers in regional corporations and administrators in large private and public institutions. These individuals have their unique combination of capabilities and experience: multi- or bilingualism,  multicultural exposures, overseas education, professional training and understanding of international standards.  In the professional fields, such as law and accountancy, there is a pool of talented professionals with diverse educational backgrounds from Australia, Canada, U.K. and the U.S.

A hub of management control

Hong Kong has been, even before 1997, a hub for a number of sizable multinationals.  Large Japanese and U.S. multinationals have long situated their regional headquarters in Hong Kong to source strategic supplies, execute new market development, as well as serve as a regional management control centre for their parent companies. They use local talents to assist in regional development efforts, coordination of regional resources and development of manufacturing facilities in China. They also enjoy the well-developed infrastructure of Hong Kong.

The geographical location of Hong Kong remains a strategic logistical advantage. This advantage could also be valuable to Canadian companies. Through Hong Kong, Canadian companies can exercise effective support and management control for their regional business development, while processing their technology transfer in the area.

As Hong Kong continues to progressively develop its intellectual capital, the Canadian business community can take advantage of this unique hub to open up the rapidly growing Chinese consumer market. A strategy to optimally use this intellectual capital hub while formulating plans to capitalize on the critical mass of the Chinese market, can only help an internationally expanding organization. 

Canadian technology innovation faces vast competition from enterprises from both other western firms from the U.S. and European Union, and organizations in developing nations that are effectively adapting to new global market. Seeking commercialization and global market share in this part of the world will be critical and challenging. In a recent speech by Mike Rowse, the dsirector-general of investment promotion at Invest Hong Kong, he pointed out that Canada has been a strategic partner for Hong Kong economically, with cumulative investment amounting to US$2.55 billion. We believe it is time for successful Canadian technology companies to formulate their optimal China development strategy — via Hong Kong.

Dr. Anthony Tam, FCMA, was the president of the CMA Hong Kong chapter between 2004 and 2005. Artie Ng, CMA, currently serves in the executive committee as treasurer of the CMA Hong Kong chapter. 

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