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 this age of electronic commerce. In 2019, the information and communications industry generated HK$95.6 billion (US$12.3 billion) of value added and accounted for 3.5% of Hong Kong’s GDP.
  
  
• In the IMD World Digital Competitiveness Ranking 2020 published by the IMD World Competitiveness Centre, Hong Kong ranked second in Asia and fifth in the world. This is an indication of Hong Kong’s outstanding adoption of new digital technology.
  
  
• The Hong Kong government has put in place several initiatives designed to foster the ICT industry development, including funding support, provision of infrastructure, international co-operation and manpower development. The Smart City Blueprint 2.0, unveiled in December 2020, sets out over 130 initiatives aimed at making the lives of the general public more convenient. This will help Hong Kong residents to understand better the benefits that “smart city” measures and innovation and technology can bring to their daily lives.
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• Hong Kong has a large pool of skilled ICT professionals, providing services to clients across a wide range of businesses. In September 2020, 76,209 people in Hong Kong were working in ICT-related fields.

Industry Features

Hong Kong has a robust ICT infrastructure and is consistently ranked among the best in the world in terms of digital competitiveness. According to the IMD World Digital Competitiveness Ranking 2020 published by the IMD World Competitiveness Centre, Hong Kong ranked second in Asia and fifth in the world, while the Digital Intelligence Index 2020 compiled by the US-based Fletcher School at Tufts University and Mastercard put Hong Kong second in the Asia-Pacific region and third globally for digital intelligence. These rankings indicate Hong Kong’s outstanding adoption of new digital technology.

As of December 2020, Hong Kong had 11 submarine cable systems, along with 20 overland cable systems connected to the mainland, and operated 11 satellites for external communications. Its household broadband penetration rate stood at 95% in September 2020, and according to the Office of the Communications Authority, its internet connection speeds are among the highest in the world.

Hong Kong has a large pool of skilled ICT professionals, providing services to clients across a wide range of businesses. In September 2020, 76,209 people were engaged in ICT-related fields, including telecommunications, information technology services and information services.

Mobile Services

At the end of 2020, Hong Kong had five mobile network operators. In September 2020, the number of mobile service subscribers had reached 22.4 million, a penetration rate of 281.2%, one of the highest in the world.

Broadband Services

As of December 2020, Hong Kong was home to 263 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. The Hong Kong Internet Service Providers Association (HKISPA) is responsible for promoting the development of internet infrastructure and enhancing fair competition in the market.

By the end of 2020, more than 2.87 million customers had used broadband services with speeds of up to 1 Gbps (Gigabits per second). In the residential market, 95% of the households use a broadband service. 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 2019, 38.3% of Hong Kong companies had their own websites, up from 26.4% in 2013. The figure varies widely from large companies (those employing more than 100 persons), 88.1% of which have their own websites, to small companies (those employing less than 10 persons) for which the figure is only 33.5%. These websites mainly disseminate company information, integrate with social media and collect customer feedback.

Cloud Computing

To encourage the adoption of cloud computing 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 in December 2013 to help make the delivery of e-government services more cost-effective.

According to the Census and Statistics Department, it is estimated that 84.9% of the business establishments used cloud computing services in 2019. Hong Kong was ranked first in the 2020 Cloud Readiness Index published by the Asia Cloud Computing Association. 

Performance of Hong Kong’s Exports of ICT Services

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 are also entering overseas markets through local dealers.

Software Developers

Many software houses undertake software development projects for Hong Kong companies expanding overseas. They help Hong Kong companies install the same computer systems that they use 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.

Latest Government Initiatives

The Hong Kong government has put in place many initiatives designed to foster the development of the ICT industry, including funding support, the provision of infrastructure, international co-operation and manpower development. The Smart City Blueprint 2.0, unveiled in December 2020, sets out over 130 initiatives aimed at making people’s lives more convenient. These should allow Hong Kong residents to get a better understanding of the benefits that “smart city” measures and innovation and technology can bring to their daily lives. 

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.

Public Wi-Fi penetration in Hong Kong is among the highest in the world, according to the OGCIO. By the end of 2020, 70,428 wireless hotspots had been installed by the government and the private sector. People can enjoy free Wi-Fi services through over 39,000 hotspots under the Wi-Fi.HK brand in all 18 districts across the territory. Users get at least 30 minutes of free Wi-Fi without having to register beforehand. 

The government is facilitating the development of fifth generation (5G) mobile communications and technology in Hong Kong. Major telecoms operators had already begun to launch 5G services by the second quarter of 2020. The government plans to open up more suitable government properties, bus shelters and telephone kiosks for operators to set up 5G base stations. 

Financially, the Hong Kong government's Innovation and Technology Fund (ITF) has provided an alternative source of funding for the IT industry. As of the end of 2020, the ITF had approved 1,269 applications on IT projects with a total funding of HK$5.2 billion.

CEPA

Under the Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA), qualified Hong Kong service suppliers (HKSS) are allowed to set up joint-venture enterprises on the Chinese mainland from 1 October 2003, providing five 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). An HKSS can hold up to 50% of the shares in the joint venture.

After 10 annual Supplements aimed at widening and broadening the liberalisation measures in favour of the HKSS sector, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve a basic liberalisation of the trade in services in Guangdong (the “Guangdong Agreement”). This was then followed in December 2015 by the Agreement on Trade in Services (“ATIS”), which extended the coverage of the Guangdong Agreement to the rest of the mainland.

The ATIS covers and consolidates commitments relating to the liberalisation of trade in services provided in CEPA and its Supplements and the Guangdong Agreement. It allows HKSSs to provide on a national basis various computer services 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 adopted under ATIS were applied nationwide 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 the telecommunications sector and computer and related services.