Hong Kong Productivity Council Chairman Sunny Tan (right) attends the Straight Talk show on TVB, Nov 28, 2023. (PROVIDED TO CHINA DAILY)

Chairman of Hong Kong Productivity Council Sunny Tan is on the show this week. Tan explains to us how the HKPC is helping Hong Kong’s industries to develop artificial intelligence, as a lot of companies might not think AI is suitable for them. He says the HKPC helps them develop and identify the right module and right software applications for them to use at the right course, and it also works with the government to give them some financial support.

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Sunny Tan:

Chan: Good evening. This is Straight Talk with Eugene Chan. Our guest this evening is the chairman of the Hong Kong Productivity Council Sunny Tan. Tan is currently a member of the Legislative Council, representing the textiles and garment, functional constituency and senior advisor to Luen Thai Holdings Limited, a leading fashion and lifestyle apparel and accessories manufacturer for which he has served for more than two decades. He is also executive deputy chairman of the Federation of Hong Kong Industries, and the executive vice chairman of the Hong Kong General Chamber of Textiles. We have invited Tan to tell us if Hong Kong industries are a thing of the past. Welcome, Sunny! 

Tan: Thank you. Thank you, Eugene. 

Chan: Sunny, the Chief Executive's Policy Address was out last month, end of last month, he actually placed quite a significant emphasis on the concept of new industrialization. It says to promote industrialization and to do this by adopting an industry oriented approach. Can you tell us more about what actual new industrialization is to the viewers?

Tan: All right. In fact, Hong Kong does have industries, but what we have been doing has been more related to maybe the light industries, but less to emerging industries, what the Chief Executive and the government trying to have a balance, applying technology, I&T to our existing industries, as well as the emerging ones. We're going in two directions. 

So, how do we apply the upgrading technology support to bring up what we have and to develop the new ones? The new ones are more like maybe applied science, advanced manufacturing, advanced material, life science, so on and so forth,

Chan: Right, when the CE said new industrialization, that kind of gives people an impression that may not be correct that all industries are gone, then Hong Kong will not have totally different new industries. Is that correct?

Tan: No, no, no because we always have demand because it comes from the consumer, so when there's a consumer demand, we have industry, we all still wear clothes, we all still buy toys for example, right? So, new industrialization means that we are trying to apply new technology. That is the first part. How do we use the i-4.0, Industrial 4.0, digitalization, how do we apply AI, artificial intelligence and robotics. But at the same time, this is more on the technology element, but new industrialization also requires certain smart and clean or new green initiatives. So, new industrialization needs the process to be cleaner, more sustainable, and greener. So, this is the key element to the new industrialization.

Chan: With all that sort of new initiatives, is this going to be costing more to the industry themselves? 

Tan: I think the key is how do we apply technology to bring up efficiency? 

Chan: Alright.

Tan: Like for example, how do we use robotics to replace our workers, but we use fewer workers, but we make the workers to be more productive, as this example.

Chan: Right. They also use a term called an industry-oriented approach. What exactly is that? 

Tan: I think different major industries will have different requirements when it comes to the type of technologies that's required. The traditional industry may require more automation in different processes, in the service process, as well as in the production process. But on the emerging side, that may require a lot more sophisticated production lines. So, it's a little bit different from one to the other.

Chan: Right when you say they're using technology to help it to be more productive, I think inevitably some of the old industries maybe sort of surpass or there could be new ones, what we call revitalized. Can you give us some examples?

Tan: I think this is a very important process, or natural progression for each industry. Take the example of textile and apparel. I think in the past 100 years, the process continues to evolve and improve, technology kept on being applied, but then there's still factories around. So, maybe I can give you certain examples in this area. In Hong Kong recently the government funded through a re-industrialization fund to support a new factory, being set up with production like making what we call whole garment sweaters. If you imagine. Sweaters before, you knit each panel and then you sew it together, but now it's one piece of garment coming straight from one machine, fully automatic. So, this is an application of the digital technology and also certain robotics-related elements to produce and the workers would not require to do a lot of the nitty gritty work, but it’s more about the supervision and also the maintenance of the entire shop floor.

Chan: So, Chairman, being leading the Hong Kong PC at the moment, how exactly is your organization helping our government to this new industrialization?

Tan: We carry a very important role in the Policy Address in promoting industrialization. The reason it's HKPC, Hong Kong Productivity Council, we are serving like a catalyst to industrial development. We are here to support the industry where we try to help, to identify and to resolve pain points. So, as we are going through the new industrialization, we are helping different industries to see where are the pain points, and how do we use technology, for example, to upgrade, to resolve their pain points so that we can move on to the new industrialization, but at the same time for us to support the new industrialization, we need technology, we need people because once we apply technology, we need to develop the people; and number three, where do they get the money to do that? So, how do we support them to apply government funding to make it work?

Chan: Right. Do you have any primary focus areas under your direction with the Hong Kong PC?

Tan: The key direction is we are really following the Policy Address in terms of the development of the key emerging technologies and emerging industries. Those are the key ones that we're working on. For example, we are working on a security device production company for two years already. We are trying to help them to improve their workflow, applying additional robotics elements in there, given the same factory size, we’re able to double the capacity, but only capacity but when it comes to output that's even more so that will be one example. But we also go back to the traditional industry. For example, there's a traditional Chinese medicine supplement company, so we help them to revamp the entire production process. In the past, it was all a lot of handwork. Okay, labor intensive, but now we put in production lines automatic bottling, labelling. The labor went down by 90 percent, but production output went up.

Chan: So, Chairman when you mentioned the term new emerging industries, I'm sure the viewers will say that sounds very exciting. But do we have that many new emerging industries in Hong Kong? Is Hong Kong that innovative?

Tan: Oh, yes, we do. A lot of times we hear a lot of very good things. I will say news from universities to say that we have a lot of different inventions, innovations. That is what we call from zero to one, the basic research. But in fact, we are also having very good what we call applied research, and the example of HKPC, we are the key driver in applied research, to bring technology to the ground, to the market and we have been supporting a lot of Hong Kong companies in Hong Kong and in Greater Bay Area, other cities in GBA to upgrade their production facilities or their research capability. And that has been the core and you will see more on emerging side. You can see more in for example, in the Science Park, there is a lot of factory space. We've been working with them very closely to bring up new facilities as well as upgrading certain facilities in the existing industrial areas.

Chan: Right, chairman. You know the title of the show tonight is "Are Hong Kong industries a thing of the past?" and seeing that you are enhancing public awareness… I've looked up your work and then you were launching a TV mini series called "Hong Kong’s Got Industries". So, do you agree that most people in Hong Kong will feel that Hong Kong has no more industries, but now it is a time to sort of revitalize them?

Tan: I would say Hong Kong does have industry to start with, and that has been a key pillar in the past couple of decades. But in the past 10 years, I will say people might be more focused on the financial services, maybe into other services, professional services and also maybe properties, tourism, but it doesn't mean that we did not have the industry side, the industrial development is there but it has changed because the labor costs went up in the Chinese mainland, in Hong Kong. So, the production is really in the entire ASEAN country plus China, while Hong Kong is still serving as the main hub. What we are doing, we are providing industrial service. If we look at the service industry in Hong Kong, it takes up a big chunk of our GDP, but then within service. about 40 percent is from industrial service and that for FHKI, Federation of Hong Kong Industry and HKU, we did a survey, we did a research on it, there's about 40 percent of the service GDP accounted for with industrial, so, it's there. And what we are doing now is we are reinventing ourselves. I mean every couple of years, we got to make some big changes and to upgrade ourselves. So, now we are at a pivotal point that we are applying technology, we are going into new industrialization to bring it up and to align our policy address direction and to align our country. I mean, from Beijing the Central Government. There's also a new industrialization policy and direction, so, we want to align with HKPC, we're here to support. 

Chan: Chairman, one last question before we go to the break. When you're talking about all this technology, you're trying to revitalize them. That means we rely on technology. Does that mean that we're going to have fewer jobs for our population, for the workforce?

Tan: I think it's more about switching to a higher value-added job. Because I think that has been evolving in the past decades. We just keep moving on. So, we need to re-skill our labor force to enable them to carry out a new job. 

Chan: Alright, let's take a break now and viewers stay tuned, we will be right back.

Hong Kong Productivity Council Chairman Sunny Tan (right) attends the Straight Talk show on TVB, Nov 28, 2023. (PROVIDED TO CHINA DAILY)

Chan: Thank you for staying with us. And we have Sunny Tan on the show this evening, and he has been talking to us about the new industrialization initiatives in Hong Kong. So, chairman, in the first half you have told us, firstly, the industries in Hong Kong are still well and alive, then we are all trying to revitalize it, and make it more efficient with the new I&T. And you also talked to us about your initiatives with the Hong Kong PC. So, I am sure the viewers are going to ask you if I am having a small business, or even medium sized, how are we going to be approached… so approaching HKPC and get some assistance? I mean it sounds like that all the work you have said so far is going to cost a bit of money. 

Tan: What we see in the industry is we at the pivotal point, where we need to reinvent ourselves because we have been quite successful in the past, being a middle person, being in the front in liaising between the West and the East in the industrial side. But now we need to apply technology. But then when we go through technology, we need a few things. It is really the technology, the money, and the people. So, HKPC, we are there to support, especially for we’ve got SME, small medium enterprises.

Chan: Right.

Tan: We have technology on hand. We don't really develop major technology, we try to identify technologies in the market, so that we can do it fast, but with our own in-house technology to make it happen for the industry purpose. Number two is we train people how to do it. Number three, we work with them or with the government to identify the right funding scheme, because this is important because the industry needs certain funding to upgrade. So, we are there to provide our professional advice to them to identify the right areas to improve and to write funding, and to train the people. 

Chan: Right. Are all the funding from the government? I mean are there any private enterprises who are happy to invest?

Tan: The funding is really from the government, primarily from what we call ITIB, Innovation, Technology, and Industry Bureau side. That is for the upgrading and the development of the emerging industries. On the private sectors, I would say that is more relating to maybe the VC investments, that is more on the Science Park, Cyberport. They are the one to incubate, to nurture all these companies. I would say that our SMEs, in fact it is a strong base of start-ups. Think about it: we don't necessarily need to term only a technology company, a small company, called start-ups, Hong Kong, all these SMEs, we have a big pool of start-ups waiting to be developed. So, we are here to support our SMEs, and hopefully we will see more and more, very very competitive companies coming from this new era.

Chan: Right. Since we are talking about all these new I&T, I mean the term “digital economy” does come up a lot in the media recently. Maybe you can tell us, from your understanding, what it is, and how developed do you think Hong Kong’s digital economy is currently?

Tan: I would say digital economy is evolving, and evolving very very quickly. When we look at how our motherland has been developing really straight from the consumer side down to the institutional side, banking, it is all digitalized. In Hong Kong, I think we are a little bit behind, but we are really playing a very strong catch-up. First start with the government, the government has been working on the “smart city” plan, working on the iAM Smart, all these are infrastructure that is required to make the digitalization working. And we as HKPC, we have been trying to be the middle person to facilitate all these processes. At the same time, on the consumer front or the platform front, we are also working very closely with the key players because I don’t think we need to reinvent anything new. But we need to know where to apply, how to apply, and how do we bring our industry now back to the industry, how do we bring our industry to adapt to the new way of the digital commerce or digitalization in business; because the digitalization has been fundamentally changing how a consumer goes in shop. It could be a consumer individual or even a business when it goes into making a purchase or procurement. So, it gives an opportunity to us because as an industry, as factory, in the past we were trying to sell to a brand, to a reseller, eventually selling to the consumer. But now being in a factory, we have the ability and opportunity to use digitalization e-commerce to go straight to the customer. Look into now all these e-commerce business, let's look into the live stream, okay? It is really shortening all these inefficiency in the supply chain, and allow us, as a factory, as an industry, to be more competitive than before. But it requires certain change and technology upgrade.

Chan: Right. Chairman, that sounds like basically HKPC is really promoting this kind of digital economy. And what do industries need to do to be able to be part of this digital economy? I mean it sounds very exciting, sounds like that is the future. What can they do?

Tan: HKPC, with our name, productivity, so we try to help everybody to improve their productivity. And when it comes to all the factories or the industry players, I think we need to have the right mindset. The industry will continue to evolve and improve, so we need to have the mindset to adopt technology, to adopt a new way of doing business. It will not go back, it will only go forward. So, by being proactive in trying new technology, applying something new, also engaging the youth, okay, hire our young people, very talented people in Hong Kong, bring them in and work with, to be honest, learn from them. And then with the technology and the government support, I think that's the way to go.

Chan: Right. Since you are talking about all these new ways forward, AI is another term that we often hear. I would use the word “prominent topic” in the society recently, especially with the introduction of the advanced language models, like ChatGPT. So, what is the current state of the AI industry in Hong Kong, from your view as well?

Tan: I think it is at the… I would not say the infancy stage, but then we are catching up, we all know that. For example, some of the developed countries are much stronger, but then China is still not bad, making very very good progress. But for us in Hong Kong, I think we have to be very careful that we do have our own identity admission because we are under the “One Country, Two Systems”. So, as Hong Kong, we need to play a very proactive and important role in developing AI in the international arena. But at the same time, how do we work with mainland, our motherland, to develop our own version of AI. And now, to make it working, we need to have a few essential elements. So, number one is do we have enough power, AI power, to support all this generative AI, for example? We need a lot of power, so the government has been taking the lead with industries to really make it happen. We see very good progress, so, I am quite confident with it. Number two is talent, okay? I would say that with “One Country, Two Systems” again, being in Hong Kong, we are able to attract a lot of good, very very good, very prominent professors and academic, and researchers to be in Hong Kong to make it happen. And number three, I would say that, it is really the general application that we need to have across different industries, to make it working. I would say that it is in progress. So, I will say that we have some way to go, but we are heading the right direction, we have full government support, and I am seeing in a very very positive way.

Straight Talk presenter Eugene Chan (left) interviews Hong Kong Productivity Council Chairman Sunny Tan on Nov 28, 2023. (PROVIDED TO CHINA DAILY)

Chan: Right. Just now you listed out the major challenges the AI industries are facing. And if Hong Kong is going to be an I&T hub under the 14th 5-year plan, so looks like we have to move in that direction for sure. So, how is HKPC, under your leadership, going to assist that? I know there are other players in the field, but I am sure having productivity, as you rightly said so, is the right body to increase our productivity. So, how would you lead your association in doing that?

Tan: Definitely it is very very important for us. What we do is what we call industrial AI because it could be individual using a ChatGPT. But then industrial AI is what we use in terms of how we gather all the big data to make the right decisions along the manufacturing process, production process. For example, how do we use AI to estimate the demand, so that we work on the right level of inventory at different level, from raw material all down to the finished goods; How do we use AI to identify consumer demands? How do we use AI to work on all the production process, to go through, to have a right optimization. One very simple example: I have some raw materials and I have some trucks, how do I make the right deliver to the right factory at the right time with the lowest cost? I need a lot of data.

Chan: True.

Tan: So, all this AI implementing into industrial side is something that we need to support our Industries to make it more efficient. The problem now is a lot of companies might not think AI is suitable for them because they are not that big. So, we are here to develop and identify the right module, right software applications, for them to use at the right course. And if needed, we try to work with the government to give them some financial support to make it working.

Chan: Right. Chairman, I am afraid we will all have to leave it there. Thank you, Sunny, for updating us with all the latest developments in this area. It is good to know that Hong Kong industries are far from being a thing of the past, and in fact, an important part of Hong Kong’s future. We certainly look forward to further development in this field. 

Allow me to share a quote from Fei Fei Li, a scientist – “if our era is the next industrial revolution, as many claimed, AI is surely one of its driving forces”. 

Have a good evening and see you next week.