LCQ3: Adoption of digital technology by SMEs

     Following is a question by the Hon Wong Ting-kwong and a reply by the Secretary for Innovation and Technology, Mr Nicholas W Yang, in the Legislative Council today (December 7):

     A study report published recently has revealed that among the 301 surveyed small and medium enterprises (SMEs) from various trades encompassing retailing, trading, manufacturing industry, etc, only about one-fourth are ready to adopt digital technology, about half of them do not understand clearly how to apply digital technology to their business, and over 70 per cent have no plans to apply digital technology. In this connection, will the Government inform this Council:

(1) as it has been pointed out in the aforesaid study report that the lack of knowledge and relevant expertise in digital technology, as well as uncertain return on digital investments are barriers for SMEs to adopt digital technology, of the authorities' measures to encourage SMEs to adopt digital technology;

(2) given that the authorities have organised a series of events under "SMEs and ITs Business Matching" since 2014 to provide opportunities for small-scale information technology companies and SMEs to look for business collaboration partners, whether they know the number of successful matching cases in such events; whether they have assessed the effectiveness of such events and how to enhance the attractiveness of such kind of events; if they have assessed, of the details, and whether they will continue to organise the same type of events; if they will not, the reasons for that; and

(3) given that the authorities launched the SME Cloud Promotion Campaign last year to promote the adoption of cloud computing services by SMEs, of the implementation situation of the Campaign so far; whether they will review the effectiveness of the Campaign; if so, of the details; if not, the reasons for that?

     The Government is committed to promoting the thriving development of digital economy and application of innovation, so as to consolidate Hong Kong's position as an information and communications technology (ICT) hub in the Asia Pacific region. Relevant work includes the provision of infrastructural and institutional support, promotion of the use of ICT by small and medium enterprises (SMEs) for business development, and nurturing talents. 
     The Office of the Government Chief Information Officer (OGCIO) has commissioned the Census and Statistics Department (C&SD) to conduct surveys on the use of information technology (IT) in the business sector at regular intervals. According to the report published by the C&SD in March 2016, over 60 per cent of medium establishments have set up their own webpages or websites, while close to 30 per cent small establishments have set up their own webpages or websites. SMEs will also adopt e-commerce or cloud computing platform for conducting online business and other electronic business operations. According to a survey conducted by the Internet Society Hong Kong and the Cloud Security Alliance Hong Kong and Macau Chapter in 2015, more than 80 per cent of responding SMEs in Hong Kong have subscribed to cloud services, representing a significant increase compared with about 50 per cent back in 2014.
     Having consulted the Commerce and Economic Development Bureau (CEDB), my reply to the three parts of the question is as follows:
(1) In the era of Internet economy, knowledge of ICT and human resources training are vital to the development of SMEs. We strive to raise enterprises' awareness of ICT through different Government departments and public organisations, including the Hong Kong Cyberport (Cyberport) and the Hong Kong Science Park (Science Park).
     As regards nurturing of talents, the Government launched the Enriched IT Programme in Secondary Schools in the 2015/16 school year to provide in-depth training for students with interest and talents in IT. The Cyberport has also organised internship programmes for students majoring in ICT to work in technology enterprises in Shanghai, Fuzhou and Silicon Valley.  In addition, the Government will expand the Internship Programme by the end of this year to cover the incubatees and SME tenants in the Science Park and the Cyberport. It is anticipated that about 1 000 additional young interns can be supported by the programme, a number of which are internship opportunities in IT research areas.
     In addition, we also provide funding support to assist SMEs in using ICT.  The Innovation and Technology Commission launched just two weeks ago the $500 million Technology Voucher Programme (TVP) to subsidise SMEs in using technology services and solutions to improve productivity or upgrade and transform their business processes.  Since the launch of the TVP, the industry's response has been very positive.
     Moreover, the CEDB and the Hong Kong Productivity Council have jointly introduced the Retail Technology Adoption Assistance Scheme for Manpower Demand Management (ReTAAS) to help the retail industry to manage manpower demand effectively. The Trade and Industry Department also provides funding for implementation of projects concerning enhancement of IT adoption through the SME Development Fund under the SME Funding Schemes. 
 (2) Having considered SMEs' demand for ICT solutions and service offered by the local industry, the OGCIO has organised six sessions of "SMEs and ITs Business Matching" for the tourism sector, catering sector, manufacturing and logistics sectors, jewellery sector, retail sector and general SMEs respectively since April 2014 to assist SMEs to have face-to-face contacts and discussions with small-scale IT companies. A total of 317 practitioners from 100 SMEs and 118 ICT companies participated in these events.
     Through these activities, the participating SMEs can better understand ICT solutions that suit their business needs, while local small-scale ICT companies are able to seek clients and explore business collaboration opportunities. However, we do not specifically keep statistics on the number of companies which have eventually succeeded in finding collaboration partners.
     The "SMEs and ITs Business Matching" has achieved the effect of driving and facilitating the engagement and matching of SMEs and small-scale ICT service providers. Apart from the Government, the individual trade associations and professional organisations have also echoed our move to hold similar events to promote businesses within the sector to use more ICT. We will continue to promote wider use of ICT among SMEs.
(3) Cloud computing can help SMEs adopt ICT solutions in business development, including sales, product promotion, inventory management, customer services, market analysis, etc. As compared with in-house installation of systems, cloud computing involves lower start-up costs, technical knowledge and manpower requirements, and therefore is particularly suitable for use by SMEs. According to the Cloud Readiness Index issued by the Asia Cloud Computing Association in March 2016, Hong Kong is the top city in cloud readiness in the Asia-Pacific region.
     To promote SMEs in using cloud computing services, the OGCIO organised the SME Cloud Promotion Campaign during the period from December 2014 to June 2015 to enhance SMEs' understanding of cloud computing and raise their awareness of the benefits of using cloud computing and how to select such services. The campaign includes the provision of more than 40 free training courses on cloud computing for SMEs in different sectors, covering retail, catering, import and export trade, logistics and land transport, sales and marketing, human resource management and accounting, benefiting over 3 800 SME practitioners.
     SME practitioners who participated in the SME Cloud Promotion Campaign indicated that the training courses were useful and they planned to use cloud services. We will continue to provide appropriate support to allow more SMEs to learn and use cloud computing. Thank you.

Ends/Wednesday, December 7, 2016
Issued at HKT 15:21