Hong Kong needs to address business mindset to turn digital potential into reality

The Economist Intelligence Unit (EIU) recently released a global research project commissioned by Telstra, which assesses the confidence of business executives in their city’s environment and its conduciveness to supporting the digital ambitions of companies. Hong Kong ranks 37th for overall business confidence.

The ‘Connecting Commerce’ report includes the first ever Digital Cities Barometer, a ranking of 45 cities around the world across five key categories relevant to business performance: innovation and entrepreneurship; the financial environment; people and skills; development of new technologies; and ICT infrastructure.

The report reveals strong business confidence in the world’s emerging economies, with Bangalore topping the Barometer across all five categories. Of the top 10, seven cities are from developing Asian countries. Darrin Webb, Telstra’s Managing Director for North Asia, said the report shows a contrast between the perception of Hong Kong’s executives and the reality of the city’s environment.

“Hong Kong performed well in the Asian Digital Transformation Index we commissioned from the EIU in 2016. This Index included objective measures across digital infrastructure, human capital and industry connectedness. Whilst last year found Hong Kong’s digital transformation readiness to be good, this year’s results show there is some doubt amongst senior executives when it comes to Hong Kong’s ability to support the digital ambitions of business,” said Mr Webb.

“Hong Kong is a global financial hub with a burgeoning start-up ecosystem and there is a real opportunity for it to become a leading technology and innovation centre. What is needed for the city to achieve this potential is for an aligned commitment across business, government and communities to address the divide between reality and perception and show that Hong Kong is taking tangible steps towards this goal and fulfilling its true potential,” said Mr Webb.

Key findings:

• Hong Kong’s executives rank skills shortages and limited funding for investment as the toughest challenges for their business transformation at 36 per cent. While both are in line with the global results, the skills challenge is particularly tough in Osaka, Bangkok and Bangalore, where it is cited by 40 per cent or more of each city’s executives.
• Fifty-nine per cent of Hong Kong’s executives believe the city’s educational institutions are ‘generally effective’ or ‘very effective’ in preparing people with the right digital skills. More than one-fifth of executives in cities with strong technology innovation reputations, such as Stockholm and Seoul, rate their local institutions as ineffective on this count.
• Hong Kong’s executives name government programs and events as the most helpful local resource for digital advice and support at 39 per cent. In China, over 40 per cent of executives value innovation labs and centres, whilst European and American cities see business associations and events as important resources.
• Hong Kong’s executives name digital security skills (31 per cent) and business networking skills (27 per cent) as the most needed for digital success. Digital security is the most in demand skill globally at 30 per cent, big data analysis ranks second at 24 per cent.
• Hong Kong’s executives see their main sources of financial assistance to be from banks or other financial institutions (42 per cent) and government programs (29 per cent). Both are in line with global sentiment with financial institutions at 37 per cent and government programs at 32 per cent.

Globally, 48 per cent of surveyed executives said their firm has considered relocating their operations to a city with a more favourable external environment. Respondents in Asian cities are most likely to consider moving (53 per cent), while nearly half in US and Australian cities say the same.

“Organisations today have numerous options – both domestically and internationally – as to where they base their business operations. This report makes an important contribution to exploring what support executives need to digitally transform their business and thrive in a connected world” said Mr Webb.

About Connecting Commerce

Connecting Commerce is a research-led programme from The Economist Intelligence Unit, commissioned by Telstra, provides in-depth analysis of the environment for digital transformation in 45 cities and 11 industries, based on a survey of 2,620 executives conducted in June and July 2017. The full report can be found at http://connectedfuture.economist.com.

This article appeared in AustCham Hong Kong’s austcham news magazine and was originally from Connecting Commerce.