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Information and Communications Technology Industry in Hong Kong

  • Hong Kong's role as a leading business centre in the Asia-Pacific region owes much to its advanced telecommunications infrastructure. The role of telecommunications is especially vital to Hong Kong's competitiveness in the age of electronic commerce. In 2016, the industry of information and communications generated HK$84.1 billion (US$10.7 billion) of value added, contributing to 3.5% of GDP.
  • In the Global Information Technology Report 2016 by the World Economic Forum, Hong Kong ranks third in Asia (12th in the world) in the Networked Readiness Index, indicating Hong Kong’s advanced position in telecommunications infrastructure, regulatory environment, and business readiness of using information technology.
  • The ICT sector of Hong Kong is among the most advanced in the world. According to the annual global ICT Development Index published by ITU in November 2017, Hong Kong ranked second in Asia after Korea, and sixth in the world.
  • To foster the ICT industry development, the Hong Kong government has put in place initiatives, including funding support, provision of infrastructure, international cooperation and manpower development. The Smart City Blueprint, unveiled in December 2017, maps out development plans for the next five years to enhance Hong Kong’s sustainability by making use of innovation and technology.
  • Hong Kong has a large pool of skilled ICT professionals, providing services to clients spanning a wide range of businesses. According to the 2016 Manpower Survey Report conducted by the VTC, 87,794 persons were employed in principal jobs of the IT sector.

Industry data

Table: Internet and Telecommunications Services
Table: Internet and Telecommunications Services
Table: Business Receipts by Type of Internet Services (HK$ million)
Table: Business Receipts by Type of Internet Services (HK$ million)

Hong Kong has a robust ICT infrastructure and is consistently ranked among the best in the world in terms of digital readiness and internet access capabilities. According to the annual global ICT Development Index published by ITU in November 2017, Hong Kong ranked second in Asia and sixth in the world, which together with Korea, were the only two Asian economies making into the top 10. According to the World Economic Forum's Networked Readiness Index 2016, Hong Kong ranked third in Asia and 12th globally in terms of readiness to participate in and benefit from IT developments.

As of May 2018, Hong Kong has eleven submarine cable systems, overland cable systems connected to four telecommunications operators in the Mainland, and operates eleven satellites for external communications. Facebook and Google are building a trans-pacific cable (bandwidth of 144 Tbps) connecting Hong Kong and Los Angeles which will come online in Q2 2019. With household broadband penetration rate at 92.6% (as at February 2018), Hong Kong Internet connection speeds are among the highest in the world, according to the Office of the Communications Authority.

Service Providers

Hong Kong has a large pool of skilled ICT professionals, providing services to clients spanning a wide range of businesses. According to the 2016 Manpower Survey Report conducted by the Vocational Training Council (VTC), 87,794 persons were employed in principal jobs of the IT sector. IT products and services suppliers were the largest category of IT users, accounting for 34.2% of total IT employment, followed by the wholesale, retail, import/export, restaurants and hotels sector (28.8%), the financing, insurance, real estate and business services sector (17.9%), and the community, social and personal services sector (11.4%).

Mobile Services

As at May 2018, there were four mobile network operators. In February 2018, the number of mobile service subscribers reached 18.4 million, representing one of the highest penetration rates in the world at about 248%. Among these subscribers, 16.98 million were 3/4G service customers.

Broadband Services

As at May 2018, there were 235 Internet Service Providers (ISPs) licensed to provide broadband services. However, not all licensees operate an active business and the ISP market is dominated by a few major players. Hong Kong Internet Service Providers Association (HKISPA) is responsible for promoting the development of Internet infrastructure, and enhancing fair market competition.

As at February 2018, more than 2.65 million customers had used broadband services with speed up to 10 Mbps (Megabits per second). In the residential market, 92.6% of the households use broadband service. Internationally, Hong Kong's broadband penetration rate is among the highest in the world.

E-commerce

Business transactions via the Internet (or e-commerce) are on the rise. In 2017, 33.6% of Hong Kong companies had their own websites, up from 26.4% in 2013. The proportion varied from 88% for large companies (those employing more than 100 persons) to 28% for small companies (those employing less than 10 persons). These websites were mainly for disseminating company information, integrating with social media and collecting customer feedback.

Table: Usage and Penetration of Information Technology in the Business Sector
Table: Usage and Penetration of Information Technology in the Business Sector

Cloud Computing

To encourage cloud computing adoption in Hong Kong, the Office of the Government Chief Information Officer (OGCIO) established the Expert Group on Cloud Computing Services and Standards in 2012. The Government Cloud Platform was launched to further facilitate cost effective delivery of e-government services in December 2013.

According to Census and Statistics Department, it is estimated that 72% of the business establishments used cloud computing services in 2017. Hong Kong was ranked second in the 2018 Cloud Readiness Index published by the Asia Cloud Computing Association.

Exports

Software Distributors

Local dealers are growing in terms of size, scope of operations and sophistication. Many services that were once performed by computer vendors are now done by dealers. Proprietary software companies also enter overseas markets through local dealers.

Software Developer

Many software houses undertake software development projects for Hong Kong companies expanding overseas. They help Hong Kong companies to install the same computer systems which they used in their Hong Kong headquarters in their overseas offices. Hong Kong software firms also export services, such as designing web sites and developing "secure software" for electronic trading, to other Asian countries.

Table: Exports of Telecommunications, Computer and Information Services
Table: Exports of Telecommunications, Computer and Information Services
Table: Major Trading Partners of Telecommunications, Computer and Information Services
Table: Major Trading Partners of Telecommunications, Computer and Information Services

Government Initiatives

To foster the ICT industry development, the Hong Kong government has put in place many initiatives, including funding support, provision of infrastructure, international cooperation and manpower development. The Smart City Blueprint, unveiled in December 2017, maps out development plans for the next five years to enhance Hong Kong’s sustainability by making use of innovation and technology.

In terms of infrastructure, the Hong Kong Science & Technology Parks (HKSTP) and Cyberport, both of which are fully owned by the government, nurture technology companies by providing state-of-the-art facilities including R&D offices, meeting venues and technical centres with professional support services.

The penetration of public Wi-Fi in Hong Kong is among the highest in the globe as reported by the OGCIO. As of March 2018, 50,939 wireless hotspots were installed by the Government and the private sector. As at April 2018, the public could enjoy free Wi-Fi services through 21,300 hotspots under Wi-Fi.HK brand in all the 18 districts across the territory. Users can enjoy at least 30 minutes free Wi-Fi services without prior registration.

Financially, the Hong Kong government's Innovation and Technology Fund (ITF) has provided an alternative source of funding for the IT industry. As of end-March 2018, the ITF had approved 7,359 funding applications on projects with a total of HK$ 14 billion.

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)

Under CEPA, qualified Hong Kong service suppliers (HKSS) are allowed to set up joint-venture enterprises on the Chinese mainland from 1 October 2003, providing 5 types of value-added telecommunications services without geographic restriction. These services include Internet data centre services, store and forward services, call centre services, Internet access services (i.e. ISP) and content services (i.e. ICP). Hong Kong services suppliers’ shareholding in the joint venture should not exceed 50%.

After ten annual Supplements to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in services in Guangdong (“Guangdong Agreement”). This was then followed in December 2015 by the Agreement on Trade in Services (“ATIS”) to extend the coverage of the 2014 agreement from Guangdong to the rest of the mainland.

The ATIS covers and consolidates commitments relating to liberalisation of trade in services provided in CEPA and its Supplements and also the Guangdong Agreement. HKSS are granted national treatment to provide various computers and related IT services, including data processing, software implementation, computer hardware installation consultancy and database services (excluding network operation services and value-added network services). All these measures are adopted under ATIS for nationwide application from June 2016.

With technology convergence on the one hand, and CEPA’s broad coverage of Internet-related liberalisation measures on the other, the following links provide further information on the preferential access to respective sectors of information technology services, computer and related services, and value-added telecom services.

Content provided by Picture: Jacqueline Yuen
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