28 Sept 2007
Creatvie Industries(HKTDC Enterprise, Vol 10,2007)
Investing In Imagination
Chinese mainland companies and industries are increasingly viewing Hong Kong's creative talents as partners, collaborators and trendsetters
Knowledge-intensive industries particularly reliant on creativity and talent are becoming increasingly important worldwide as either an economic force or creative inputs to other activities.
The term can cover a wide range of industries, but Hong Kong's include advertising, architecture, design, digital entertainment, film, IT services, music, performing arts, publishing, broadcasting and dealing in arts, antiques and crafts.
These industries have become particularly important on the demand side, where there is synergy between product development and creative input, and innovative ideas eventually turn into superb and commercially viable products and services.
Numerous business opportunities have emerged in recent years as the Chinese mainland further opens up and develops its services sector and promotes its cultural industries.
However, while the mainland is clearly the world's powerhouse in terms of light-consumable manufacturing, its services trade lags considerably behind the trade in goods.
Indeed, the mainland has persistently run deficits in services trade and its services sector is relatively under-developed, contributing around 40% of the country's GDP.
According to proposals put forward by the mainland's State Council, the aim is to raise the contribution of the country's services sector by three percentage points to 43% of the country's GDP by 2010.
Given the service sector differences between the mainland and Hong Kong, there is clearly further scope for Hong Kong's creative industries to be partner, collaborator and trendsetter for the mainland.
Designers in demand
Hong Kong's image as an international city depends on creative industries such as design that translate into branding and innovation for all goods and services.
However, the past decade or so has seen a host of Hong Kong designers look to the mainland for both market and production opportunities, for example, helping speed the development of the graphic design and printing sectors in neighbouring Shenzhen.
Thanks to their grasp of international trends and market sensitivities, Hong Kong designers maintain an edge in design conceptualisation and programme execution over their mainland counterparts.
Nonetheless, industry sources note that the gaps are narrowing, especially in technical multimedia skills, given the mainland companies' increased international exposure and burgeoning access to overseas information.
Many Hong Kong design firms also offer a wide range of services to their mainland customers - for example, as brand consultants to collaborate with the latter in re-branding their products for international markets.
This is a win-win situation for both parties, as a 2005 study by the UK's Design Council indicated that companies that invested in design performed up to three times better than the stock market index.
It is also not uncommon to find Hong Kong design companies which are multi-talented and whose business cuts across different sub-sectors of design, straddling product and interior design, or engaging in promotional and advertising design.
Digital entertainment developing
Hong Kong animation companies will benefit from the mainland's liberalisation drives, which have seen digital entertainment earmarked as a key cultural industry to be developed during the 11th Five-year Plan.
Rules have already been introduced to require TV stations to have children's channels, which will significantly raise the demand for animated content.
Some Hong Kong companies have already set up production bases on the mainland, especially in nearby Shenzhen, to produce a series of animation programmes for compact discs and airing on mainland TV stations.
The switch to digital terrestrial broadcasting in Hong Kong and on the mainland, which will enhance the quality of broadcasting and promise high-definition television programmes, will also create opportunities in the production of 2D/3D computer-generated (CG) animation.
Hong Kong possesses the best CG design and multimedia capabilities in the region - for instance, the CG effects in regional box office smash-hit movie Kung Fu Hustle were undertaken by a local company.
Hong Kong's strengths can be found in areas like drafting, computer graphics, visualisation, post-production editing and project management - all of which are particularly important as CG animation is both capital- and labour-intensive with a long production lead time.
Electronic games growing
Like Korea, Hong Kong's high Internet and broadband penetration rates have helped the development of the local online game market, while local electronic game developers are also helped by a good supply of content from films, comics, fiction and television programmes.
As a result, Hong Kong's 20-plus online game developers focus predominantly on the local market, though the appeal of the mainland market is unquestionably enormous.
The mainland's Internet penetration rate is just 10%, but this translates into an Internet population of more than 130 million, thus creating a massive online game market that is also fast expanding.
Currently, the mainland market is dominated by Massively Multiplayer Online Role Playing Games (MMORPG), some of which reportedly have more than one million concurrent players.
The mainland's General Administration of Press and Publication (GAPP) has introduced a China National Online Game Publishing Project to nurture the development of indigenous online games, with the aim of producing at least 100 "Made in China" online games by 2008.
GAPP expects that there will be a substantial demand for talent to cope with the fast-expanding domestic online game market, and Hong Kong game developers will benefit from the GAPP scheme - especially as GAPP's list of local games includes one from Hong Kong.
Currently bit players on the mainland, Hong Kong companies may team up with suitable mainland partners to develop games attuned to mainland gamers, leveraging their creativity and expertise in game development and project management.
An international business hub with intimate connectivity and enormous activities in international finance, trade, transportation, telecommunications and business services, Hong Kong has also seen the development of an estimated 5,000 IT service providers.
They are engaged in diverse service areas ranging from data processing, tabulation, computer networking and infrastructure, customised software, web-based applications and intranet solutions to multimedia, EDI, e-commerce, video-on-demand and training.
In addition, it is estimated there are around 700 independent software vendors (ISVs) in Hong Kong that are able to produce competitive, customised software to support local and foreign clients.
Increasingly, Hong Kong ISVs have tapped the mainland market, with many partnering with mainland counterparts to jointly develop products for the mainland market or export.
The prospects of exporting to the mainland are helped by the country's continual upgrade of its telecommunications infrastructure and sustained increase in industry investment.
IT research company Gartner expects the mainland's IT spending will grow at a compounded annual rate of 6.2% to reach US$85bn in 2009, boosted by the mainland's 11th Five-year plan.
More than 4,000 companies are engaged in Hong Kong's printing and publishing industry, making it the largest creative industry in employment terms.
The huge potential of the Chinese mainland market is the focus of the world, but publishing on the mainland falls within the cultural realm and is therefore subject to stringent regulation.
Despite this restrictiveness, Hong Kong publishers have shown keen interest in exploring the mainland market and have established ties with mainland publishing companies in the importation and distribution fields as well as the copyright trade.
Some Hong Kong companies have successfully made inroads into the mainland market in the form of wholly-owned or joint-venture book distributors, while others have entered the mainland market in areas of book/ magazine distribution and related advertising agency work.
Clearly, Hong Kong's keen understanding of Chinese culture and markets and proven capability in commercialising creative ideas into innovative products and services will ensure that the Hong Kong and mainland creative industries will develop in a mutually profitable fashion.
Hong Kong's Key Advantages
Hong Kong is widely regarded as a creative centre in Asia that is well-positioned to develop its creative industries thanks to:
- lots of creative talent which can flourish in a free society with unfettered flows of information, capital and goods
- a creative production process helped by excellent intellectual property protection and unswerving commitment to business contracts
- its understanding of Chinese culture and markets, and its capability in commercialising creative ideas into innovative products and services
- its role as the world's most service-oriented economy
- its flourishing services sector, which contributes 90% of Hong Kong's GDP