Hong Kong recently kicked off their 2014 International IT Festival, signalling intentions to make the tech sector a strategic priority. The question is, should New Zealand follow?
Hong Kong wants to develop tech as its fourth revenue stream. Finance, logistics and professional services are the other three typically mentioned.
The move makes sense for Hong Kong. For a start, at just over 1,000 km square, Hong Kong is tiny. There's limited natural resources, so human and intellectual capital have long played a role in its economy.
Hong Kong's geopolitical situation is also pretty compelling. Run as a special administrative region of China, Hong Kong is a doorway to one of the world's largest manufacturing economies. This has long seen Hong Kong being a gateway destination for those seeking to tap into Chinese trade opportunities.
When talking about China, the numbers are huge. The Pearl River delta (which spans as far north as Guangzhou and south as Jiangmen) has a whopping 64 million people generating a staggering RMB 6,048 billion - (US$974.26 billion) annually. What's really boggling is the fact that the Pearl River Delta accounts for only 0.4 percent of China's land and an even tinier percentage of its population.
Hong Kong operates under a version of the English legal system, making it a popular choice for corporates wanting to do business with the familiarity and security of a known legal system.
Advantages aside, recent global economic crises have sent shockwaves through the Chinese economy. The once booming economies of manufacturing regions such as Guangdong have slowed dramatically. In the manufacturing city of Dongguan, growth has sputtered from a once healthy 18.1 percent to just 6.1 percent.
Wary of the chaos unfolding in the mainland, the Hong Kong government are looking towards science and technology.
This requires an IT savvy population, which has seen internet access become a key policy issue. The disadvantaged and disabled can get access to subsidised computer hardware and broadband plans. Similar policies exist for the elderly, along with education programmes so they can get online regardless of their circumstances.
Bridging the digital divide is only a first step. Hong Kong is developing strategies aimed at nurturing tech sector start-ups to grow into businesses that'll contribute to Hong Kong's economic growth.
This has seen the Government partnering with universities to create the Hong Kong Science and Technology Park.
Located on a 22-hectare site, it consists of 330,000 square metres of offices and laboratories, resembling something out of a utopian sci-fi flick.
With its own shops, a clubhouse, cycle paths and even an outdoor amphitheatre, it is more of a small town than a science park. As I strolled around, a group of school kids on a field trip wandered past. They were clearly excited to be there. I couldn't help wondering just how thrilled kiwi kids would be visiting a science park.
Then there's Cyberport. Designed as a business incubator, it has over a million square feet of offices and is designed so tech start-ups can lease space along with IT infrastructure at a subsidised rate. Business mentoring services are provided too.
Even though both parks represent a sizeable investment, both have already begun to generate some serious money. The rents charged to shops at both parks help, but the real money is coming from tenants.
Tenants at the science park generated a healthy HK$160 billion (NZ$21.7 billion) in revenues in 2013. This doesn't take the wider benefits of jobs created and related spin-off growth into account either.
The final piece to Hong Kong's bid to grow their tech sector has been a relaxation of immigration policies so people with IT skills can enter Hong Kong and secure jobs.
So the big question is this.
Looking at what Hong Kong are doing to grow their tech sector, should New Zealand do something similar?
It is an election year after all. At the time of writing, little to nothing has been said to date by the various political parties on their intentions towards NZ's tech sector.
The need for a strong tech sector needs to be a hotly debated topic. Our over-reliance on primary industries has seen NZ's income levels (which used to be above those of many Western European countries) overtaken.
So should tech be a strategic focus for NZ?
The answer according to Ullrich Loeffler, country manager for IDC New Zealand is an emphatic yes.
"Global spending on IT was US$3.7 trillion in 2013 and IDC forecast the market to grow to US$4.3 trillion by 2017. According to MBIE's ICT industry report 2013, New Zealand's ICT exports in 2012 were approximately NZ$1.1 billion, which equates to approximately 0.025% share of the global market opportunity. You don't have to be a rocket scientist to see the economic value New Zealand could achieve if this share increased marginally."
Loeffler goes on to say that a healthy tech sector could help overcome constraints to New Zealand's economic growth:
"The geographical distance to many trading markets disadvantages NZ in export sectors where physical goods or commodities are the export value. ICT, in many cases, presents a 'weightless' export opportunity which can be delivered via internet services. This puts New Zealand on level terms with any potential trading geography as long as sufficient bandwidth is available to ensure service levels."
Loeffler's view makes a lot of sense. Investment in international bandwidth is sorely needed. Additionally the logic of a weightless economy is pretty convincing.
Thankfully, Things are already happening in New Zealand's tech sector. Businesses like Orion Health, Rakon, Xero are already proving that New Zealand can foot it in tech.
This said, challenges exist. Gaining scale to successfully compete in global markets requires access to funding and access to venture capital. Many tech start-ups are struggling to find people with the right skills. According to Loeffler fixing this requires a long term approach.
"The government would be well advised to copy some learning from the All Blacks where future talent is managed from a 'grass roots level', unfortunately we are a long way away from seeing a similar approach in ICT and technology in a broader term."
There's considerable debate around this issue and some argue that the education sector is too removed from industries that they're supposed to be preparing the future workforce for. Their argument goes that the education sector has failed to identify technology trends and tweak curriculums to cater for future opportunities.
Meanwhile New Zealand continues to export milk, butter, bits of dead animals, wine and wood to the world. This unfortunately isn't going to close the income gap between New Zealand and the rest of the world. It is this very gap that causes many of our best and brightest to head overseas in search of better opportunities.
So what can be done?
The good news is that there's already a lot happening. The New Zealand government has already classified IT as a strategic focus and has implemented a raft of initiatives aimed at giving New Zealand's tech sector a lift.
High profile initiatives such as UFB are already underway, plus there are plans for new innovation parks and incubator programs, such as the Waikato Innovation Park and NZTE's Incubator Programme.
Moves are afoot to tackle one of the biggest challenges facing New Zealand's tech sector - the lack of skilled IT workers.
The skills shortage is a key irony of New Zealand's economy. Unemployment levels may hover around the 6 per cent mark, yet bizarrely there's also a skills shortage. That people are out of work while employers are desperate for IT savvy workers highlights the need for a greater focus on education and even changes to New Zealand's immigration policies.
Most of the initiatives in play are however government funded, and vulnerable to being dismantled when there's a change in government. This is particularly worrying as developing a vibrant and competitive tech sector is a marathon, not a sprint.
Because of this there's a need for consensus from all sides of the political spectrum on both the importance of and the strategies used to grow the tech sector. This would also mean agreeing that ideological tinkering be minimised as much as possible.
So what lessons can New Zealand learn from Hong Kong? One of the biggest issues holding New Zealand's tech sector ambitions back is the shortage of an IT skilled workforce.
Ever forward looking, the Hong Kong government saw a tech savvy workforce being central to growing Hong Kong's IT sector.
This led to initiatives such as the development of an IT internship programme plus the development of a Task Force focused on IT skills development. Making a career in tech something people aspire to needn't be impossible or difficult in New Zealand.
Just as significant in Hong Kong was the move to set up science parks and incubators such as the Cyberport so emerging tech start-ups had an ecosystem in which they could flourish.
Adopting similar strategies to Hong Kong is thankfully already underway in New Zealand. Hopefully our under-resourced tech sector will begin to flourish.