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Speech by PSED at opening of 8th Efficient Consumer Response
Asia Conference (Eng only)
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Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at opening of the 8th Efficient Consumer Response Asia Conference today (September 27) (English only):

Mr [Manuel] Fong, Mr [Barron] Witherspoon, Anna, ladies and gentlemen,

Good morning! I am delighted to join you at the opening of the 8th Efficient Consumer Response (ECR) Asia Conference. And for guests from other parts of the world, I welcome you warmly to Hong Kong, Asia's premier logistics hub. I have no doubt that you will have a very enjoyable stay here.

I must confess that when I first heard of the theme "Adding Magic to the Supply Chain", I was immediately reminded of íV not the supply chain íV but the all-too-familiar "Welcome to the Magic" of the Hong Kong Disneyland. As the Permanent Secretary for Economic Development, I happen to be also responsible for tourism development. But come to think of it, the emphasis on "magic" is perhaps more than a pure coincidence: common to a successful theme park and good supply chain management is the fervent quest for innovation and creativity.

Innovation and creativity are crucial in our everyday challenge to stay atop in face of fierce competition. Globalisation has changed the outlook of the business environment and generated ever higher consumer expectations for quality, reliability and speed in supply chain management. To cope with this change, logistics service providers are constantly in search of strategies to enhance responsiveness to customer demand, reduce costs, add value, and - eventually - boost profitability. The rapid advancement in technology offers new opportunities and made possible many innovative supply chain solutions. In fact, smart application of IT-enabled solutions is no longer an option for supply chain managers. It is a must.

This explains Hong Kong Government's focus on information connectivity as we map out our logistics development strategy. In modern logistics, the seamless flow of information enhances efficiency, transparency and reliability along the supply chain. It is arguably even more important than physical connectivity, especially if we wish to climb further up the value chain in global trade. In response, we will launch the Digital Trade and Transportation Network System, or DTTN for short, by the end of 2005. The DTTN will provide an open, neutral and secure interface for data exchange amongst supply chain players in Hong Kong, throughout the region, and globally.

In technical terms, the DTTN will overcome the hurdles of incompatible message formats and transmission protocols adopted by different users. As a common e-platform, it serves as a round-about to link up stand-alone, vertical information systems, and achieve savings by reducing paperwork, shortening process time and removing the need for data re-entry íV hence avoiding human errors and delays.

What makes the DTTN unique is that it accommodates standards and protocols in use rather than prescribing and imposing new ones. As such, it adds value to the supply chain through interconnectivity. I should also stress that the use of DTTN service is voluntary, and no exclusive franchise will be granted for its operation. In the typical Hong Kong way, its success or otherwise will be left entirely to market forces. However, with direct industry participation throughout its development, we are confident that the DTTN will enhance Hong Kong's competitiveness and our status as a virtual logistics hub.
 
Another key element in our strategy to stay competitive is to explore new IT solutions and test out their applicability in logistics operations. The application of radio frequency identification technology, or RFID, is a fervently discussed topic amongst supply chain managers. RFID is not a new technology. What is so "innovative" or "creative" about this is the productive application of it to new and broaden areas of activities. RFID technology presents immense opportunities for transforming and revolutionising the global supply chain as it can enhance logistics transparency, speed up data flow, increase flexibility and tighten up security.

However, whether manufacturers, logistics service providers and import-exporters will indeed reap the potential benefits of RFID application will depend on their readiness to invest in related research and development (R&D) projects, and to develop new business practices for RFID-enabled IT solutions.

Here in Hong Kong, the Government is dedicated to promoting innovation and technology development, and applying R&D outcome to meet the practical needs of different economic sectors.  Last December, six R&D projects in RFID, including one initiated by GS1 Hong Kong, received funding support of nearly US$6 million. In June 2005, we secured another US$6.7 million for setting up an R&D Centre to foster the development of core competencies in applied R&D in logistics and supply chain related technologies, with an initial focus on RFID. Jointly hosted by universities in Hong Kong, the Centre will conduct about 80 projects in five years and initiate projects in three major technology areas, including RFID tag and reader technologies. GS1 Hong Kong is a leading advocate in promoting global standards, best practices and enabling technologies in supply chain management, and has been invited to be a strategic partner of the R&D Centre.

Our logistics industry is equally if not more aware of the need to embrace new opportunities arising from RFID application: other than the active involvement of GS 1 Hong Kong, the Hong Kong Logistics Development Council has tasked its E-logistics Project Group to closely monitor development, and to promote and coordinate RFID-related R&D projects and trial runs. The council will also be represented on the preparatory committee for the establishment of the R&D Centre. Ultimately, our objective is to make Hong Kong the trend setter in Asia, rather than a follower, in the application of RFID in logistics operations.

Since Hong Kong itself is a small consumer market, in developing our RFID standards, we must embrace and help shape RFID developments both in the Mainland of China and globally. And industry players need to collaborate in the development and subscription of compatible RFID standards so that the technology can be applied in a coherent and productive manner to enhance supply chain integration and logistics efficiency. Of course, in a market economy such as Hong Kong, standardisation must be driven by the market, and through industry consensus, rather than mandated by the government. Forums such as today's Conference provide an excellent opportunity for Hong Kong players to exchange views with overseas counterparts, and to contribute to the dynamic process of RFID standardisation.

Before closing, I would like to congratulate GS1 Hong Kong, ECR Hong Kong and ECR Asia for bringing this event to Hong Kong. I am sure the conference will generate ample food for thought, and that we will all emerge from it wiser.

And do come and visit us often íV your presence adds magic to Hong Kong. In return, we promise to add value to all your business and professional endeavours.

Thank you!

Ends/Tuesday, September 27, 2005
Issued at HKT 12:32

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