49% of AI enterprises expressing difficulties in recruiting technical talent HKPC provides nine major recommendations for establishing Hong Kong as a well-recognised “International AI and Data Industry Development Hub”

HONG KONG SAR - Media OutReach - 10 November 2023 - Hong Kong Productivity Council (HKPC) released the key findings on their "Hong Kong AI Industry Development Study" today, focusing on the status of Hong Kong's artificial intelligence (AI) industry development, domestic and overseas competition and local corporate utility. HKPC also provided nine major recommendations for establishing Hong Kong as a well-recognised "International AI and Data Industry Development Hub". As one of the highlights of "2023 Policy Address", the HKSAR Government has stated "AI and data science" as one of the three focuses of new industrialisation development. Upon receiving LegCo funding a few years ago, Hong Kong now hosts 14 cross-industry AI research laboratories and three universities ranking in the world's top 30 universities with AI-related subjects and research, the HKSAR Government will also establish a "Digital Policy Office" to accelerate the construction of a high-performance computing (HPC) data centre, which is slated to complete in 2024-2025 and is already gradually applying AI technology into its public services. In order to build Hong Kong into an "AI and Data Industry Development Hub", how should enterprises and governments respond? In light of this, HKPC collaborated with the Hong Kong Institute of Economics and Business Strategy (HIEBS), HKU Business School at The University of Hong Kong to conduct a "Hong Kong AI Industry Development Study" in mid-2023 to explore the various needs, opportunities and challenges the industry is currently facing. A total of 216 AI-related enterprises participated in the survey, and the key findings of the research are as follows: Overview of the development of Hong Kong's AI industry: 49% of participants expressed encountering difficulties in recruiting technical talent Among the AI ​​enterprises interviewed, 25% are large companies, and 75% are small and medium enterprises (SMEs). Of these, 17% said they are developing at all three levels (basic layer, technology layer and application layer), and 22% said they intend to extend their development to other layers in the future. 55% of the companies are looking to expand their businesses into both international and local markets. In comparison, 14% and 11% of companies will choose to focus their businesses in Hong Kong and the Mainland, respectively. Financial overview:

• 51% of large companies stated that they are currently profitable, with 31% of overall enterprises claiming to be profitable.
• Funding sources: 43% of companies report receiving funding from the HKSAR Government, while 19% received funding from venture capital/angel investors.
• Cumulative investment amount: 49% of companies invested less than HK$1 million, while 21% invested between HK$1 million and HK$5 million, 6% of companies invested between HK$5 million and HK$10 million, 5% of companies invested between HK$10 million and HK$100 million, and 4% of companies invest over HK$100 million.

Industry development overview:

• 48% of companies are solely developing AI for one industry, while 16% of companies target two industries and 15% of companies target three industries at the same time.
• Targeted industries: 29% telecommunications and information technology services, 24% medical/clinical and health equipment, health products, pharmaceuticals, 23% education, nurturing/training, 22% manufacturing, and 21% Government organisations.
• Main sources of income: 63% from Hong Kong, 19% from the Mainland, and 15% from overseas.

Current major challenges in the industry – insufficient HPC processing power and data, and difficulties in recruiting technical talent:

• Insufficient processing power: 44% of enterprises express having difficulties securing enough processing power, and 71% cover the shortfalls through cloud computing services, of which 31% choose HPC data centres in the Mainland while 26% choose HPC data centres overseas.
• Insufficient data: 44% of companies are having difficulties collecting data, and 16% say it takes a long time to collect sufficient data. Meanwhile, 8% reported that they have no relevant data.
• Recruitment difficulties: 49% of companies are having difficulties recruiting, and some even reduced their hires of technical talent in Hong Kong. 77% of companies reasoned that it is due to Hong Kong's high operating costs, and 41% expressed that Hong Kong lacks relevant technical talent. Nevertheless, 45% of companies still plan to increase the hiring of Hong Kong technical talent.

Overview of domestic and overseas AI ​​industry development: Governments worldwide are promoting the development of AI-led industries. In the Mainland, the Chinese Government is...