Hendrick Sin, co-founder and vice-chairman of CMGE Technology Group, speaks at a China Daily Asia Leadership Roundtable at Hong Kong Convention and Exhibition Centre in Hong Kong, Dec 5, 2019. (CALVIN NG / CHINA DAILY)
Hendrick Sin, founding partner of China Prosperity Capital Fund, is on the show this week. As an expert specialized in investment in technology, Hendrick says the government's strategic fund, which aims to bring larger tech firms to Hong Kong and open up R&D centers, is not only in the right direction but also important for Hong Kong. He also says with the Greater Bay Area background, Hong Kong can and should be able to attract more private investment to help the city to develop I&T. He says the government can set up "fund of funds" to better help start-ups in HK.
Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Hendrick Sin.
Chan: Good evening. I'm Eugene Chan with Straight Talk. Our guest today is Mr Hendrick Sin. He is co-founder and Vice-Chairman of CMGE Technology Group Limited and founding partner of the China Prosperity Capital Fund, a leading venture capital firm with a primary focus on technology investment. He has also been an investment banker, and has had over 12 years of entrepreneurship experience in the Greater Bay Area. We have invited Mr Sin tonight to give us his perspective on Hong Kong, taking the lead role in innovation technology for the region. Welcome Hendrick.
Sin: Thank you for having me. Eugene,
Chan: Right. You know, President Xi has given Hong Kong the role of becoming an international innovation and technology hub, under the 14th Five Year plan. At Straight Talk, we are planning a series on the innovation technology sector. Last week, we had professor Wong Kam-fai, from the Chinese University.
Sin: My good friend.
Chan: Yes. And he was on as an academic in research and development. This week, we want to tap on your experience as a tech entrepreneur. You know, KF told us that the previous government had invested over $150 billion into this sector. But some viewers, they don't feel the result as much as they like, saying that we are kind of having slow progress for the last 25 years. What is your view on that statement? And actually, what is the current status of Hong Kong's innovation and technology sector?
Sin: I think we are in a good position for a quantum leap, Eugene. I think, Carrie administration has poured in $150 billion, which is a big initiative, bigger than ever, in the past, in terms of the investment into innovation. You know, very well, we have very good universities in Hong Kong, right, top 100, five of them. And we have two very good incubators, Science Park and Cyberport. And so, I think we have the right ingredients. Now, the government gives more support into this sector. And I think, with all these elements put into place, and also the Central Government policies, also giving us the status or the hopes to become the international R&D innovation center. I think this is a very good goal. And at the same time, I think everyone is working towards it; government, private practices, and private monies. And I think all that with enough time given I think the results will come out gradually,
Chan: I like the word you use quantum leap, meaning that things should happen in the foreseeable future. KF has also mentioned a term called upstream midstream, and downstream as he said, for upstream, he talked about all the researchers and all the work that we've done at universities, we are very strong. But when you talk about downstream, which is more or less your forte, which is the commercialization of the industry,
Sin: Yes.
Chan: We have kind of been lacking. Do you agree in the last few years?
Sin: I think it's making progress. I think currently, we are facing a lot of innovations at the part of the university size, as I mentioned, academia like professor KF Wong, I think they have done a lot to make innovation happens in the lab, in terms of writing papers, right, I think, but translating the technology into usable, applicable applications, products, services, it takes a bigger market to test it. I think Hong Kong as part of the Greater Bay Area hub, I think we can make good use of these platform by testing in a bigger market, but I don't believe GBA or China is the only market but maybe it is easier, accessible market for us to test our prototypes, to test our thinking philosophies.
Chan: So, you know, our Chief Executive Mr John Lee, in his manifesto, he also mentioned that he’d like to see the commercialization of all this technology transfer. So, I mean, you've also been in the industry. What have been the challenges or actual bottlenecks in the past? I mean, you have very good experience in all this because you are the Election Committee member in the sector. You're also one of the directors of Cyberport. Not to mention a chairman of the Macro Fund Investment Committee. So, you basically will have to pulse what has happened. So, why haven't we done as well as we should in the last few years?
Sin: I think we are heading in the right direction, Eugene, as I see in Cyberport, so, we have created five unicorns in the last few years. It is not an overnight success, actually it has been a lot of innovations and a lot of hard work to make that happen. Also, from government support and private support. So, I think in terms of the challenges we face, I think for startups, what I see is always people's and money, right? For people, I think, to get the right people into the sector, is something I think takes a bit of time to make it happen. Because, as you know, Eugene, very well, I think a lot of students in the universities, they tend not to have the first choice perhaps in STEM or in engineering. Maybe they want to be doctors, they want to be lawyers more so. I think these are traditional Chinese family values. But it's different in the United States, like where I have my education, I think engineers and scientists have slightly more opportunities elsewhere. But Hong Kong, I think we need to have an ecosystem where I think when people study this major in engineering, they can find good jobs with good pay. I think this is happening. And that's why I think the ecosystem is evolving. The government and private sectors are also finding ways to support these startups. But because of COVID, and because of other issues, I think, there have been different cycles that we see. But more importantly, I think, good startups, they will find ways to get the capital. But I also urge the government to actually find more opportunities to support these startups. I think, even at difficult times, I think it's important to stay healthy and to stay upbeat for the startups. And this is something that we have been doing in Cyberport. And for example, our macro fund has been investing regularly on companies with good caliber, as well as with the right qualities we always support.
Chan: Hendrick, I mean you had painted a more positive picture for the viewers because as you said basically it takes time, and a change of mindset. So, if I'm going to ask you, well, what are the critical success factors of the innovation technology?
What would you say?
Sin: Okay, I think to find a paying point in the market, and how you can address it, right? And, like myself, I'm an entrepreneur. So, I think this is important to get the market's attention if you have a product or you have a service that addresses certain market needs. So, I think it is important also not to forget, when you have innovation, you need to have a market that can absorb this innovation. So, I think Hong Kong is moving in that direction because of these GBA opportunities or global opportunities, to apply our innovations and technologies into a bigger market, bigger perhaps than our 7 million population to test the idea.
Chan: Hendrick you mentioned the ecosystem has evolved. And we know that there's a new alliance that was set up like a couple of weeks ago, it's called the Hong Kong Science and Technology Innovation Alliance where KF is also one of the Vice Presidents and also the Secretary General. And he said one of the objectives is to bring together the government, the industry, academia and research circles. So, you've been in the industry? Is the industry being properly or appropriately represented in that and can you see this alliance being able to help the ecosystem to evolve at a faster pace? What do you think?
Sin: I would think that it’s the responsibility of everybody is not just an alliance. I think we have a different alliance. We have different organizations. We have a selection committee. We have a lot of consultation groups, the government under John I think is very receptive to innovation ideas.
Chan: He actually came to the ceremony.
Sin: Yes, he came to the ceremony, and in fact, he came to many ceremonies. So, I think we are very grateful to see his support. And I think his continued support, I think more importantly, is to get the Northern Metropolis as well as Hetao, in my opinion, in my humble opinion, because I spend a lot of time in China, although I spend a lot of time living in the United States as well. But I see our GBA opportunities to be crucial in terms of our IT sector growth in the future. So, I think to get all these great policies and ideas implemented, so that we can have more access to a bigger market, but also with the right guidance, and also all the support to get our services.
Chan: Hendrick, before we go to the break. I want to ask you a quick question. People talk about... you talk about startups. Eventually the word unicorn will come in.
Sin: Yes.
Chan: So, a very quick question to ask you. You've been there and how do we have more startups successful? I mean, making it to be a unicorn, even listing in Hong Kong? What do we have to do to help them?
Sin: I think, in terms of startups, I think you need to give them the sort of the… most important is, as I mentioned people and money, I think supply of people the right set of skills. I think it's important not only in Hong Kong, perhaps we can have overseas Chinese coming back with know-how and specialty to come back to do startups. And I think the capital, yes, I think Hong Kong needs to get more international funds, including mainland Chinese funds, to come to Hong Kong to get all these startups also having access to these capitals.
Chan: Okay, Hendrick, let's take a break. We will be right back.
Chan: Welcome back. With us tonight is Mr. Hendrick Sin, and we have been talking about Hong Kong's leadership role in innovation and technology from his prospective as a tech entrepreneur and an investor. So, Hendrick, in the first part, as I said earlier, you used the word ‘quantum leap’, saying that the last government has invested the money, and now with the people, with the ecosystem evolving, you think things is going to turn good in the next few years, which is very encouraging for the viewers because Hong Kong, mainly as an international financial centre, although being number three, we need more industry to keep our city thriving. So, one area I want to ask you is… I have to repeatedly say that issue, it is what KF mentioned last week, that we have a difficulty of making commercialization of actual technology, transfer as you said so earlier, same as in Mr. John Lee’s manifesto. And being next to the Greater Bay Area is one big advantage because one of the problems we have is we only have a 7.35 million population, where they have 80 million next door. But in that context, yes we have a bigger market, but we are also in direct competition with our mainland sister cities, Shenzhen, Guangzhou, Shanghai, and even Beijing, in I&T. Do we have a niche?
Sin: I think we do have a niche. I think we have niche in certain sectors, not everything. For example, FinTech. Because Hong Kong is very strong in the finance industry, right? Applying FinTech technology into a bigger territory perhaps is a winning formula. For example, BioMed, MedTech. I think we have very good universities, very good hospital systems, and how to apply technology into that sector. So, I think Hong Kong might have a chance to succeed in certain strategic areas, so, if we can incubate those areas further, I think there is a higher chance of success. KF mentioned about difficulty in technology translation. I think if we can apply more capital into these academic areas, what I meant is let the capital… like myself, I think we have been looking into universities, laboratories’ products. I think we can tell what can be useful and what can be, perhaps, applicable into a bigger market. And let the capital and academia talk, and we are, I think, in the process of doing so and have been bringing a lot of these technologies into a bigger market in GBA. So, I think it is something possible, so strategic areas and applying capital, and allow these are good technologies, they have the certain opportunity to try it out because the capital will lead them to the market. And they also have also, I think, put into the right people's team and perhaps will make the project a success.
Chan: Hendrick, you are saying that we have some niche in BioMed, even FinTech, but Hong Kong, apart from being an international financial center, we are also good in transportation, aviation, and also a trade center, as part of the National 14th 5-year Plan.
Sin: Yes.
Chan: Has that been able to support the I&T work, the whole industry?
Sin: I think so, I think so. I think it is all part of the bigger ecosystem, right? I think in all these areas, trade or shipping, you can also apply a technology into that particular segment. For example, logistics is an example, AI is an example, in all these automation. So, I think that this is all possible and also I think by finding the right strategic segment for the government to support, I think with a focus, and with also the retooling of the skillsets. For example, from traditional industries, and then by applying specialists, and making technology and with that traditional industry, to become a new hybrid industry. I think that is giving these industries further energy, plus providing more sort of labour into supporting that.
Chan: Hendrick, you repeatedly mentioned that resources are very important, like all walks of life, we need money injection to get the engine starting, and maybe that's why the financial secretary, Paul Chan, has announced that there's a launch of a $5 million tech fund in August to help support local tech companies. I'm sure part of your request from your election committee subsector. And also to attract foreign start-ups. So, will this actually attract even more support from other private equity funds and to come in to help our start-ups? What do you think?
Sin: Okay, this is called a strategic fund. Strategic fund, I think they have a focus in getting some, I think, larger tech companies to come to Hong Kong. With that they may open up R&D centers in Hong Kong and provide employment opportunities. And I think that is very important because these bigger tech companies will bring in a lot of new opportunities for local Hong Kong IT practitioners. I think this is the initiative from our Financial Secretary. I think this is… coupled with other funds, for example, Future Fund and ITVF. That I think have different focus and investing into different stages of the IT sectors and start-ups. And that may create good complimentary results.
Chan: Yes, Hendrick. With a better ecosystem, with more funds, hopefully with more private equities fund to attract more foreign start-ups, this is all the direction we want to get. And maybe let's see what our Chief Executive, when his Policy Address comes up, whether these are some of the KPIs. But one factor that we repeatedly mentioned in our show to our guests are the geopolitical tensions with between motherland and the US, and also with the war in Russia and Ukraine. Has any of these affected the attractiveness of Hong Kong for foreign capital that’s coming… The one thing people are very concerned is whether Hong Kong now is on the international chessboard. Can we still function as an international financial center? One factor being will money still come in or leave Hong Kong, maybe? How do you see that in your sector?
Sin: So, because I take part in investment, I have heard a lot of start-ups in Hong Kong, they have difficulty in getting fundraising done in the last 2-3 years because of COVID, and perhaps because of other political or social concerns. So, I think this is something that we, start-ups, that we see they are facing. So, I think this is not optimal, but this is where I think…
Chan: Are things getting better?
Sin: It's getting better, but I think the government having what you just mentioned, the strategic fund, Future Fund, ITVF, these are all about capital getting into the start-ups’ hands. I think that can be done more because Hong Kong does not have a fund of funds. If Hong Kong government considers, which I've also proposed at different times, that with more capital, fund of funds, that means private capital will match. For example, the government puts in 40 percent and 60 percent coming from private sector, that will give the bigger pool of money to support these start-ups, even at difficult times. So, I think it is all about the ecosystem being build up at a bigger scale. So, I think different policies, I think our Chief Executive is considering at the moment.
Chan: Hendrick, just now we touched on the foreign money, but let’s move on going back to the GBA, where the mainland is doing well and let's work together and collaborate, and synergize. I mean you have 13 years working in the mainland and you have 2 lines of businesses, so you know what they are thinking. And to facilitate the cooperations in Shenzhen, the Hong Kong government is building what’s called Hong Kong Shenzhen Innovation Technology Park, which is in the Lok Ma Chau loop and focuses on 6 areas, such as healthcare technology that you just mentioned, big data and artificial intelligence, robotics, new material, microelectronics, and financial technology. So, is this something that could make a turnaround difference for Hong Kong businesses? What you think? In this new area.
Sin: Yes, I think it is very important and I think this is in line with what I believe in is strategic segments. So, you mentioned 6 areas, I think this is the areas that they try to incubate more innovations. At the same time there are policies that allow more data transfer. For example, mainland data and Hong Kong data being collaborative. So, I believe that will have a good chemistry or a good result. I think all these happening in maybe Hetao and also Northern Metropolis, that means these are Hong Kong territories, that means I think we have the convenience and we have all these not only support from Hong Kong government, and also PRC government. I think it's easier to attract people to go there and to set up their office, getting together.
Chan: Hendrick, in the last question, you have 30 seconds. You being… many guests of our show have always been passionate about the youth development in Hong Kong. President Xi had said that the youth are important pillar for Hong Kong. And you have been in different positions, you are president of the Internet Professional Association, you are also president of Youth Council, you are on the youth development commission. But you said earlier, our youth more like the medical specialty they want to specialize in, what will be your advice to the government to help our youth to go in this very exciting area of innovation and technology, where you said is about to explode? What would you ask the government to do?
Sin: In short, I think to promote some success stories, to promote some role models, to give youth more opportunities to see the future by entering into this market, this is a good path and this is something worth…
Chan: Anything worked out for role models?
Sin: I think also opportunities that open up, not from the past.
Chan: All right, okay. So, Hendrick, I'm afraid that is all the time we have.
Sin: Yes.
Chan: And Mr. Sin, as an entrepreneur in innovation and technology, making it as an unicorn in the US market and now have become enlist in Hong Kong, has set a precedent for others to follow and shown that Hong Kong can be a leader in innovation and technology. Have a good week, stay healthy, and good night.
