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SCMP x HKUST - Expert Insight Series 2017: Professor Xu Yan

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The mention of the word "innovation", especially when linked to the telecommunications industry, usually conjures up images of new products and services  or new business models. But according to one of Hong Kong's leading telecommunications experts, the ability to use existing technology to improve existing products or services should not be overlooked.

"Innovation doesn’t always have to involve the use of cutting-edge technology, innovation can simply mean improving a product or process or delivering a service in a more efficient way," says Professor Xu Yan, associate dean of HKUST Business School (HKUST EMBA Program, Executive Programs and China Strategy) and professor of information systems, business statistics and operations management. He noted that while the rapid development of the internet has provided Hong Kong with a robust infrastructure to explore and exploit technology, the opportunities to develop new products and services or upscale existing technologies are not always utilised to the best advantage. 

"Hong Kong always ranks near the top of global competitiveness indexes, but in the sub-sectors of innovation and creativity, we usually rank below twentieth place on an international scale," says Xu. On the latest Global Competitiveness Index, Hong Kong was placed ninth, but below 25th place for the three previous years in the innovation bracket.

While the professor is keen to see an uptick in the way that innovation is incorporated into products and businesses, he is also quick to stress that producing goods and services just for the sake of innovation, serves no useful purpose.  Xu also points out that, across the world the demand for specific goods and services is always fluctuating.

"It used to be the case that companies would use innovation to lower the cost of production, or use innovative materials and design to satisfy current demand,” says Xu. “Nowadays, innovation is about anticipating future demand, which regularly calls for enhanced technology innovation.  Hong Kong is no exception to this trend, and without reacting to it, not all businesses can be expected to survive."

Xu studied telecommunications engineering at the Beijing University of Posts and Telecommunications before studying for a second degree in telecommunication management.

Describing himself as a "telecommunications professional", Xu also spent five years as a lecturer before gaining his PhD in telecommunications policy from Strathclyde University in the UK. In addition to publishing two books, Chinese Telecommunications Policy and Innovated by Hong Kong, he has conducted numerous research projects for household name companies including British Telecom, China Mobile, Siemens, Hutchison Telecom and the International Telecommunications Union (ITU) of the United Nations.

Xu’s  recommendations and research for the  Audit Commission of Hong Kong Government, Communications Association of Hong Kong (CAHK), Central Policy Unit has helped shape the government's telecommunications and innovation strategies. For example, he helped form the framework that allows the government to distinguish the difference between type one and type two innovation concepts. He explains that while type one technology innovation might involve semi-conductor development or an initiative involving nano-technology, type two involves using technology to leverage on existing strengths. A good example, he says, is using Hong Kong's professional services platform to boost innovation strategies.

Another way Xu believes Hong Kong can accelerate its innovation performance is through open innovation, the process of combining internal resources with external co-operators. He cites the example of Hong Kong accounting and law firms collaborating with, and providing services to technology firms based in Shenzhen.

"Hong Kong can pursue innovation by focusing on its core strengths such as world-leading professional services," says Xu, who believes that when applying the open innovation concept, a company can benefit from external resources like technology and, at the same time, make available its own skills and knowledge innovations to the partner organisation.

Hong Kong can pursue innovation by focusing on its core strengths such as world-leading professional services

Given the wide variety of ways the telecommunications industry is playing an expansive role in daily life, it's vital that businesses understand the global dynamics of innovation. "Today, innovation, including innovation management and technology are key drivers not only for new ways of doing business, but also for transforming existing processes," says Xu. 

By leveraging on core strengths, Xu sees opportunities for Hong Kong’s business community to assist and collaborate with mainland enterprises and seeking business opportunities overseas, often referred to as "going out" strategies. Furthermore, Xu believes the Greater Bay Area, a scheme proposed by Beijing encompassing Hong Kong, Macau and nine Pearl River Delta cities encompassing about 66 million people, will provide Hong Kong companies with the impetus to collaborate and innovate.

Xu also believes that Hong Kong companies can benefit from the much-discussed One Belt, One Road (OBOR) initiative, the ambitious China-led mega development plan to connect more than 60 countries through trade and commerce along the ancient Silk Road through a network of maritime trade routes that connect Asia to Africa, the Middle East and Europe.

Instead, however, of focusing wholly on business opportunities linked to OBOR corridors, Xu believes that Hong Kong enterprises can tap into opportunities around the world by helping companies to establish and implement their individual Belt and Road strategies.

"We have eight universities each producing a high standard of research work, we have a talented and capable workforce and government policies that support innovation, so what we need is a committed, collaborative effort," suggests Xu. To achieve this goal, he adds, identifying and then executing appropriate strategies is of paramount importance.

The professor also suggests that Hong Kong could take a page out of Israel's book by seeking collaborative opportunities with US companies, which often have extensive home and international marketing experience. With a similarly sized population to Hong Kong with around 8 million people, Israeli companies are able to compete globally, which Xu says debunks the myth that population size is a barrier to innovation advancement.

As Hong Kong's universities, including HKUST, make a concerted effort to incorporate concepts of entrepreneurship into their programmes, Xu has noticed a significant upswing in the number of graduates who want to be involved in Hong Kong's business start-up community.

"It used to be the case that graduates from our programmes such as the Global Elite Business programme, couldn't wait to step into a high-paying job with one of the big investment banks, he says. “But these days, they are equally likely to say 'I want to join a start-up company'," Xu says. 

HKUST's hosts Be Your Own Boss seminars in which business leaders from around the world share their experiences with students, as well as its Million Dollar Entrepreneurship competition, which allows the winners to use the cash prize as seed money to form their own company and further market their inventions. Both are helping to raise students’ interest in entrepreneurship. 

According to Xu, if one of Hong Kong's start-ups can emulate the success and global impact of China's Alibaba or Tencent, it would elevate Hong Kong's ambition to become Asia's innovation and technology-hub, several rungs up the ladder. 

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