Innovation Strategy Common Ground – from Poverty Alleviation to International Web3 Centre
Hong Kong has long been successful in its four pillar industries, comprising trading and logistics, financial services, professional and producer services and tourism. According to the research by the HK government, they contributed close to 60% of Gross Domestic Product (GDP) and almost half of the total employment before COVID. However, all these four pillars have encountered the decline in their respective area – resulting from the rapid change in market need & user behavior, regional and global competition, the development in new value-chain and advanced technology, as well as geo-political environment. As a solution, ‘innovation’ has been introduced to address these pain-points of Hong Kong. The question to ask, how should we develop the innovation strategies – instead of coming up ideas for the sake of ‘innovation’? In this article, we will discuss how innovation strategy could be approached from the perspective of poverty alleviation to Web3 industry development – two topics sound not-related, but their common ground might give us the insight on how we could find the development path of Hong Kong.
The Chief Executive announced in the 2022 Policy Address to restructure the Commission on Poverty (CoP) to study targeted poverty alleviation for groups in need, which in their report in 2024, focusing on the three areas, sub-divided flats, single-parents and elderlies. No doubt, they are key concern in Hong Kong, but we could look at the journey Mainland has taken in the past 2 decades and to see how innovation have been playing a key part in the journey – from the approach of ‘targeted poverty alleviation’ being introduced in 2013 to progressing to the strategy ‘rural revitalization’ in 2021. Our team at HKU has recently published the book, ‘Poverty Alleviation Case Analysis in China – Poverty Alleviation Best Practices via Practices and SDG Strategies’, with International Poverty Reduction Center in China (IPRCC 中國國際減貧中心), with the support by Bill & Melinda Gates Foundation. IPRCC was previously under National Bureau of Rural Revitalization and is now at Ministry of Agriculture and Rural Affairs. Through analyzing different strategies carried out to address the key specific pain-points at the focal regions and villages, via the effort and collaboration of key stakeholders, we could get an overview of how Sustainable Development Goals (SDGs) by the United Nations could be achieved, which aligns with the national policy in China.
The concept development starts with “who should help”, “who should be helped”, “how to help” and “how to move on”. In microscopic view, it would be about detail of the focal poverty condition, including understanding the root cause of the users and regional pain-points with its corresponding solution; in macroscopic perspective, it is to identify engaging wider range of resources available and to aim at the further long-term economic and industry development. ‘From giving him fish to teaching him how to fish (授人以魚不如授人以漁)’ is what being mentioned a lot. To look at a few good examples – For an area with low education level among the youth for local industry and economy, effective talent-cultivation programs were established, with enterprises providing job-pairing assistance and government organizing further training workshops; for a remote area with limited source of income from their local produce and insufficient infrastructure, apart from the infrastructure development and supply-chain establishment, it is to combine cultural confidence and comprehensive solutions that coordinate primary, secondary and tertiary industry; creative solutions like wealth creation evening school empowered by TV broadcast was also introduced, with impact amplified by various online and offline supplementary activities. The collective efforts resulted in achieving the first target of United Nation 2030 Agenda for Sustainable Development – 10 years ahead of schedule on its complete eradication of extreme poverty.
The poverty alleviation achievements in China and the related experience and learning have demonstrated the understanding of the pain-point and core problem, while bringing in resources available with coordinated effort by different parties, including but not limited to local people, nationwide enterprises, and government departments. The keys here are ‘in-depth understanding’, ‘coordinated efforts’ and ‘creative confidence’ – aligning with the Design Thinking problem-solving methodology: empathy, interdisciplinary innovation and iterative. Hong Kong Government has been supporting the training and application of design thinking since the Unleash Hong Kong initiative in 2018. From the poverty alleviation case, this approach is a proven one – what could be studied further is, has this innovation strategy been carried out thoroughly, whether the execution is in-depth and creative enough.
Similar innovation strategy could be applied to the Web3 development in Hong Kong.
Over the past decade, the decentralized blockchain protocol Web3 has brought digital revolution to the financial sector. While the financial market has experienced roller-coaster rides cos of bitcoin and crypto, the transformation it brought has been more than at the speculation market – digital asset management, cross-border transactions, and the updating financial, monetary, and securities policies. While The Hong Kong Government aims at becoming an international Web3 hub and to create noise in global financial market so as to attract investors and capital, what could be done with an innovative strategy in the design thinking framework – aligning with The Policy Statement on the Development of Virtual Assets (VAs) in Hong Kong in October 2022 and the set-up of the Task Force on Promoting Web3 Development in June 2023?
The general view is that 2025 will be a pivotal year of RWA, a product generated from Web3 technology. Real World Assets (RWA) are tangible assets like commodities or equity that have value in the ‘real world.’ Tokenizing these assets allows them to be divided into smaller, more manageable units, broadening the investor base and adding market liquidity. Research has shown that financial institutions like JP Morgan and Goldman Sachs are actively implementing asset tokenization, recognizing their potential to enhance market efficiency and liquidity of a market over USD10 trillion.
Hong Kong’s robust financial system, strategic geographical position between Mainland China and overseas markets, and progressive regulatory environment forms the foundation for Web3 development and asset tokenization. Beyond real estate and commodities, this latest fintech tool is expanding into niche markets like carbon credits, green finance, luxury collectibles, and intellectual property. It is encouraging Hong Kong government is introducing sandbox to experiment new ideas and to roll out consultation and white paper on the topic. While there is still challenges to address the likes of regulatory fragmentation, custody risks and limited secondary liquidity, in order to embrace this financial technology and the community, we could start with asking what asset, where it is from, who would buy, how to make good investment in the web3, and how to exit. This could unlock Hong Kong’s path towards an International Web3 Center.
China has been in a tough global geo-political environment with also the need to address the economic challenge of our own. Thus, Hong Kong as the bridge between east and west has an important role to play in this current challenging and competitive environment. The need of an innovative strategy and implementation becomes utmost important across different sectors.
We may start with ‘in-depth understanding’, ‘coordinated efforts’ and ‘creative confidence’.
Prof. Joseph Chan
HKU Business School, Associate Director at Centre for Innovation and Entrepreneurship
