Hong Kong boasts some of the best research and development institutions and has established itself as a global financial powerhouse. However, when it comes to the Fourth Industrial Revolution and fostering genuine innovation, the city is lagging behind. As manufacturing jobs vanished in the 1990s, Hong Kong transitioned to a focus on entrepot trade, supply-chain logistics, finance, and tourism. But now, the pressing question arises: Can Hong Kong reinvent itself as a proactive innovation and technology hub in synergy with Shenzhen?

Recently, the Hong Kong Special Administrative Region has made a significant commitment by allocating a hefty HK$200 billion (approximately $25.7 billion) toward innovation and technology (I&T) development. Despite these ambitious investments, there is a glaring shortfall in the city's "knowledge and technology outputs," according to the World Intellectual Property Organization (WIPO). It highlights a serious challenge: Hong Kong has not effectively translated its substantial innovation investments into high-quality technology outputs. In fact, it produces fewer innovations relative to its spending on research and development.

WIPO evaluates 133 economies using 80 indicators encompassing various aspects of innovation, categorized into inputs and outputs. Unfortunately, since 2020, Hong Kong's standing has sharply declined from the 11th position to 18th this year, reflecting a troubling decrease in both innovation inputs and outputs. Competing nations like Singapore (4th) and South Korea (6th) have established formidable reputations, while Germany (9th) and China (11th) remain competitive, placing pressure on Hong Kong to catch up.

In particular, Hong Kong has struggled with "business sophistication" and "infrastructure," with its performance in "knowledge and technology outputs" notably underwhelming. On a brighter note, it has excelled in indicators reflecting "market sophistication," "institutions," "creative outputs," and "human capital and research," suggesting that while there is potential, a significant overhaul is necessary to harness it.

The critical question remains whether Hong Kong should redefine its I&T vision, fully integrating with Shenzhen to form a cohesive high-tech hub. The reality is that the manufacturing capacity that once characterized Hong Kong has shifted, with the epicenter of technological innovation now lying within the prestigious universities of Beijing and the state-driven technology firms. Shenzhen serves as the practical base for technology testing and prototyping.

What does this mean for Hong Kong’s future as a startup-friendly environment? The city continues to stand tall as a financial center, offering vital support for startups in the equity-raising domain. However, without strategic partnerships and a robust plan to boost its innovation output, Hong Kong risks losing its competitive edge in a rapidly evolving global landscape.

As the city ponders its next steps, fostering strong alliances with leading technology ecosystems and investing wisely in innovation could be the key to revitalizing its I&T sector. What changes can we expect, and will these investments finally propel Hong Kong into a new era of technological advancement? Only time will tell.