Business Outlook
The 14th Five-Year Plan has outlined a range of policies to support the development of scientific research and advanced manufacturing. To stimulate the growth of advanced manufacturing, the Chinese Government will focus on the strategic emerging industries, including smart production and robotics technology, high-end new materials and high-end medical equipment. Hong Kong manufacturers can adopt a more proactive approach by embracing advanced technologies, accelerating equipment replacement and applying advanced technologies to new products.
The 14th Five-Year Plan announced by the Chinese Government in 2021 established Hong Kong's important position as an international innovation and technology centre. To achieve this goal, the Hong Kong SAR Government has launched a wide array of strategies to enhance the I&T ecosystem and achieve reindustrialisation. As Chief Executive Mr. John Lee said after the release of the 2022 Policy Address, the Hong Kong Government is committed to developing and applying the Internet of Things, artificial intelligence, new materials and smart production processes so to develop high-end manufacturing industries suitable for Hong Kong, and promote the upgrading and transformation of traditional manufacturing industries.
The Hong Kong SAR Government has implemented policies and provides subsidies to attract high value-added manufacturing to relocate to Hong Kong. A number of Hong Kong manufacturers, who are in the Industrial Internet of Things (IIoT) and automated production stage, have already set up their production lines locally. The lack of upstream and downstream manufacturers to form a comprehensive industrial value chain locally and the insufficient third-party producer services become the major challenges for manufacturers to relocate to Hong Kong. Government policy support is required to enhance the producer services provision in support of advanced manufacturing development.
Smartification of manufacturing production is an opportunity yet a challenge to manufacturers. Most factories have mechanical automation equipment to replace part of the labour force and improve efficiency, but they have not yet reached Industry 4.0 in terms of intelligent production with fully integrated human-machine communication and machine-to-machine communication. Factories in more advanced industrial phase, i.e. IIoT or automated production phase, tend to strengthen their capability in technological R&D, application of advanced technologies and management innovation through technologies. Factories in less advanced industrial phase, i.e. traditional production or the hybrid of traditional and automated production, tend to enhance their capability in product design and brand building.
Hong Kong has the necessary conditions for the development of innovative technology and the promotion of manufacturing upgrades. Closer collaboration between industry, academic and research sectors would help industrialise research results into practical applications and functional products within the shortest possible time to maintain competitiveness and return on investment. The research and application of I&T will help manufacturers gain ground in advanced manufacturing, microelectronics, nanotechnology and biotechnology.
ICT, AI and robotics, data analysis, big data application, IoT and new materials are the core technology fields for the reindustrialisation of Hong Kong. The adoption of advanced technologies can help manufacturers move towards high technology and high value-added manufacturing models, linking machinery and equipment, personnel, processes and data in operating processes to build capabilities in communication, monitoring, analysis and decision making, and facilitating more flexible and automated manufacturing in response to rapid market changes. However, Hong Kong faces a considerable shortage of related engineering talents.
In the manufacturing workforce, Boomers are leaving faster than the Millennials, Gen Xers and Gen Zers enter to the industry as the younger generations show very limited interest in manufacturing. Together with the lack of required talents to fill the skills gap, the situation of the manufacturing workforce will be more challenging in the years to come. This reflects the need for Vocational and Professional Education and Training (VPET), STEM education, effective on-the-job training programmes and the application of advanced technologies such as automation and robots to automate manufacturing operations.
