Google: Hong Kong is lagging far behind on digitalisation

The pace of digitalisation in Hong Kong is lagging behind neighbouring cities, with slow digital adoption of local small-and-medium businesses, according to Google Hong Kong’s latest research.

Google Hong Kong released the second edition of the Smarter Digital City Whitepaper, which is conducted by Ipsos, an independent market research company. The research documented the progress of digital development in five sectors - travel, finance, retail, living and people.

The research finds that only 30% of local residents considered Hong Kong a smart city despite high internet penetration, ranking it third behind Tokyo (53%) and Singapore (39%). While only 50% of local small- and medium-sized firms (SMEs) agreed that digital was a fundamental of business, less than those in Shenzhen and Guangzhou (66%).

Leonie Valentine, managing director, sales & operations, Google Hong Kong, said the traditional mindset of business has held Hong Kong back. Local SMEs have refrained from embracing digital and innovation of customer experience and delivering service.

This is reflected in only 17% of SMEs retails in Hong Kong engaging in e-commerce, compared to 46% of their counterparts in Shenzhen and Guangzhou.

The research finds that 85% of corporates have increased digital investment this year, and 93% said they would invest more in the next two years. Valentine is expecting the progress of business digital transformation to accelerate in the next 1-2 years.

Corporates are eager to digitally transform their businesses. However, the digital talent shortage remains the top conundrum. 54% of corporates considered data analytics to be an important skill for their employees, yet 70% of corporates have difficulty finding talent with data analytics skill set. Only 14% of Hong Kong residents believed that the city is successfully developing digital talent.

“Talent is fundamental to smart city development. It is critical for Hong Kong to build a strong talent pipeline, by embracing STEM education, promoting digital literacy, and providing vocational training to help the workforce get prepared for the digital economy,” said Valentine.

Despite the publication of the Hong Kong Smart City Blueprint by the HKSAR Government Office of Government Chief Information Officer (OGCIO) and the announcement of HK$50 billion for innovation and technology projects over the past year, only 14% of the public surveyed think the government is significantly investing in making Hong Kong a smarter city, down one-third from 21% in 2017.

The Whitepaper reveals that there was only a slight increase in the Consumer Digital Index (CDI) scored 2.44 out of 5, up 0.09 points compared to last year. But the 55 - 64 age group shows a significant uptake in digital engagement, up 0.28 points compared to 2017. As Hong Kong residents continue to use technology and embrace digital in their everyday life, new opportunities emerge for key industries including travel, finance, retail and healthcare to innovate and improve experiences through digital channels.