Mr. So, Secretary for Commerce and Economic Development, speaks about his career and the Commerce and Economic Development Bureau’s priorities for 2017, identifying opportunities for solicitors across the regional landscape.
Doom and gloom haunt the economic news like a spectre these days, and it seems as though each new week summons another fearsome shade. From the sharp deceleration of global trade to underperforming advanced markets, the armies of trade protectionism have been awakened, and are marching to the beat of de-globalisation. Arrayed against them, the world’s policymakers can do little more than wring their hands, and console each other that times are undeniably tough and many challenges lie ahead.
While acknowledging that Hong Kong’s economic outlook will be fraught with uncertainties arising from the current geo-political environment in the year to come, Mr. So, Secretary of the Commerce and Economic Development Bureau (“CEDB”)1, continues to fix his gaze upward – focusing on progress and collaboration and embracing his work and Hong Kong’s future with hope. From opportunities in intellectual property (“IP“) trading and tourism to those that will flow from the Belt and Road initiative, it appears that Hong Kong’s policy bureau chief will spare no effort in finding new ways and fashioning innovative policies to grow Hong Kong’s economy. Much work remains to be done, but his approach suggests that he is channelling the Lion Rock spirit as he sets to work each day.
Selected to Serve
When asked what prompted his move from the private to the public sector, Mr.So explained that it was unintentional and actually came about as a result of his involvement with the Democratic Alliance for the Betterment and Progress of Hong Kong (or the DAB).
While Mr. So is currently at the forefront of politics in Hong Kong, he revealed that he wasn’t always politically-minded. “Growing up in Hong Kong during the colonial era, no one really talked about politics or encouraged political debate in school. It wasn’t until I moved to Canada and joined a major solicitor’s firm that I developed an interest,” he recalls. It was the firm’s collegial culture and his colleagues’ penchant to share their political views and debate policies that piqued his interest.
Mr. So remained politically engaged when he returned to Hong Kong in the 1990s, indicating that in the latter years of his practice he was motivated to use his spare time to help the DAB with policy research. “My sole interest in joining the DAB was to assist with research; I had no interest or intention at the time of joining the government. But that’s life. It takes you in unexpected directions,” he said. Eventually, he was nominated to chair the DAB’s policy committee. From there he became a Central Committee member, then a Standing Committee member and then the DAB’s Vice Chairman.
“To make a long story short,” he quipped, “my transition to the public sector was the by-product of being tasked with nominating people to join the government. After submitting my list to the DAB leadership, someone asked whether I could also be placed on the list. After giving it some thought, I felt that I could, but I never believed I would be selected. But, as you know, that is what happened.”
After 20 years of practice and stepping down from his role with the DAB, Mr. So took up the post of Under Secretary for Commerce and Economic Development in 2008. In 2011, he moved into his current role as Secretary for Commerce and Economic Development.
While Mr. So has generally been quite hands off when it comes to drafting laws, he was very involved with the drafting of the Competition Ordinance from start to finish. He considers his work on this front to be a major milestone in his career. “We started by going to district council meetings and to business chambers to lobby for their support. What we found was that many business owners were afraid of inadvertently falling into a trap. To get the business sector on board, we had to compromise on some issues and assure them that the Competition Commission would handle cases with due process and care, but it was an uphill battle from the start.”
In spite of the struggle, he spoke positively of his experience, highlighting how much he had learned over his four-year involvement. One key take-away was that meaningful change takes time. “By looking at other jurisdictions and at some of the cases they have prosecuted, we saw that there are no quick fixes. Conducting an investigation and putting a case together is a lengthy process. It takes years and massive amounts of resources. However, I’ve always been of the opinion that the best way to ensure compliance is through public education,” he said. To him, this is the whole aim: to achieve a fair, level playing field through compliance, as opposed to relying on blunt-force litigation.
When asked about the law’s effectiveness, he said it is too soon to tell. “The competition law will be an evolving piece of legislation. It will need to be reviewed from time to time to assess whether the provisions are effective and whether adjustments need to be made.”
Bureau’s 2017 Priorities
As the CEDB’s portfolio is quite broad, Mr. So provided a high-level overview of their 2017 priorities: from tourism to IP trading to the Belt and Road initiative, the CEDB’s roster is full.
The first area up for discussion was Hong Kong’s tourism industry, which makes up five percent of the city’s gross domestic product (“GDP”). As a pillar industry, it also drives growth in other related sectors, including the retail, hotel and catering industries and contributes significantly to Hong Kong’s economy. While the number of visitor arrivals has more than doubled over the last decade, the tourism sector has faced a number of hardships in recent years due to the slowdown of the global economy, depreciated currencies and relaxed visa requirements for Mainland visitors in neighbouring countries. The situation has become more stable, but the outlook for the coming year remains challenging.
Despite the lacklustre forecast, Mr. So remains optimistic about a number of initiatives the Government is supporting to enhance Hong Kong’s tourism appeal, including light shows, home-grown mega events and small-and-medium sized Meetings, Incentive Travels, Conventions and Exhibitions (“MICE”) events, among others. “My priority this year is to add on to the tapestry of Hong Kong’s tourist attractions and to create a more unique cultural experience for visitors,” he said.
As regards progress on the mega events front, Hong Kong has recently hosted the FIA Formula-E Hong Kong ePrix, the “Light Rose Garden-Hong Kong” art installation at Tamar Park and the Sun Hung Kai Properties Hong Kong Cyclothon, which hopefully can be expanded to the Pearl River Delta. With the current initiatives set in place, Mr.So is confident that Hong Kong can be turned into a mega event capital of Asia.
Another key area of focus is IP trading and harnessing Hong Kong’s potential to attract more business. Pointing to the City’s status as a major trading hub and as a global “super-connector” to the Mainland, Mr. So said he was “very bullish” on Hong Kong’s potential in this regard.
Over the years, Hong Kong has accumulated much experience in cross-border IP transactions, and has become a regional marketplace and service centre for activities ranging from copyright trading, licensing and franchising to design services and technology transfer. It is also a boon that Mainland IP is rapidly expanding, he explained.
But for Hong Kong to fully capitalise on its collective professional experience and service centres, it must establish a robust IP protection regime, which the IP Trading Working Group has noted is “a prerequisite to any aspiration or credible bid to promote IP trading in the competitive environment of the global economy.”
In an effort to enhance Hong Kong’s IP protection regime, the Government has introduced amendments to the current patent legislation to reform and update Hong Kong’s patent system. Hong Kong will have its own independent patent system that enables applicants to file applications for standard patents directly in Hong Kong, without obtaining a patent in a designated patent office outside of Hong Kong first. The current “re-registration” system will continue to run in parallel, and applicants can still re-register standard patents that were granted by the State Intellectual Property Office of China, the European Patent Office and the United Kingdom Intellectual Property Office. The Government is forging ahead with preparations to implement the new patent system in 2019. The Government has also pledged to keep other components of Hong Kong’s IP regime (copyright, trade marks, registered design, etc) under constant review to ensure the system follows international norms and is conducive to IP trading. Just this February, the Government kick-started the legislative process to prepare for the implementation of the international trade mark registration and management system under the World Intellectual Property Organization’s Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks in Hong Kong in 2019. While much work remains to be done, Mr. So believes a key to Hong Kong being able to maintain stable economic growth lies in its ability to transform into an IP trading hub.
The CEDB also actively supports cross-sectoral collaboration (or crossover) initiatives, with the aim of encouraging collaboration across industries, including the manufacturing, design, film, electronic games, comics and animation and garment industries. It is hoped that by creating links between different creative and innovative sectors, local businesses will develop more insights as to how new elements can be added to their existing products and services. We hope to encourage cross-industry synergies that will allow local businesses to enhance their brand competitiveness, Mr. So explained.
One of the ways in which the CEDB supports these initiatives is by arranging meetings amongst members of different industries. Mr. So joked that he has become a professional “matchmaker” of sorts by helping people come together on and offline. For him, the idea of promoting crossover initiatives sprung from his negotiations with Disney in Los Angeles – Disney was interested in expanding in Hong Kong through a series of IP licensing arrangements. “I walked away from those meetings thinking that Hong Kong has the right resources and ingredients to pursue similar opportunities. When I returned, I began exploring opportunities on this front.”
To highlight progress in this space, Mr.So recounted a recent crossover initiative success story involving MOZACCO, whose sports gear debuted at the Standard Charter Hong Kong Marathon 2017. It is the first Crossover Co-create Brand of the Federation of Hong Kong Industries and its debut at the Standard Charter races demonstrated the Co-create Brand’s vibrancy and positive energy, while also promoting healthy life-style habits, he explained. MOZACCO’S work even got him out to run the 10 km after a six-year hiatus, which he happily reported finishing at a faster pace than he completed his last race.
Mr. So spares no effort in promoting crossover initiatives because he believes it is the trend of development. It can enable Hong Kong to capitalise on its advantages and pool its strengths to support the development of Hong Kong brands, he explained. It also has the potential to help develop Hong Kong as an IP trading hub, as cross-industry collaboration involves IP rights management.
Invest Hong Kong
Another focal point of the CEDB’s efforts is supporting Hong Kong’s start-up scene through Invest Hong Kong. Mr.So believes that Hong Kong has a good environment to enable a whole new generation of disruptors to create, test, show and launch their new businesses.
A recent positive development in this area is the Hong Kong and Shenzhen governments’ signing of a Memorandum of Understanding to jointly develop the Hong Kong/Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop. This will be the largest innovation and technology platform that the Hong Kong Government has ever established and will hopefully make Hong Kong’s start-up scene even more attractive.
Belt and Road Initiative
Finally, Mr. So turned to Hong Kong’s efforts to support the Belt and Road initiative, a significant development strategy launched by the Chinese government to promote economic cooperation and further market integration among countries along the Belt and Road routes. Specifically, the initiative plans to connect 65 counties in Asia, Africa and Europe to strengthen collaboration in five areas – infrastructure, trade, policy, finance and people.
Mr. So explained that Hong Kong can play an important role in the Mainland’s implementation of the Belt and Road initiative by facilitating infrastructure investment and financing in the region. The Government plans to continue working with key stakeholders to promote and develop Hong Kong as an infrastructure and financing centre, as well as take advantage of other opportunities such as professional services, which have also been identified as key areas for growth and investment, in Chinese and third markets along the routes.
As Mr. So recently attended an informal ministerial gathering on World Trade Organization issues, hosted by the Swiss government in January, he discussed the global outlook for trade and the rise of protectionist sentiments, which has cast uncertainties over the global economic and trade outlook.
As Hong Kong is an open economy built on trade and services, it will inevitably be affected if the trend of protectionism intensifies to an extent that hampers global trade performance. Mr. So indicated that the Government will continue to monitor policy developments of various economies on the front of trade protectionism and mitigate or protect the economy from its effects.
One of the ways the Government seeks to create stability is by having legal certainty vis-à-vis its trade with other economies. In addition to entering into Free Trade Agreements (“FTAs”) and regional economic co-operation arrangements, Hong Kong continues to look to new opportunities for its economic development. So far, Hong Kong has concluded FTAs with Mainland China, New Zealand, the Member States of the European Free Trade Association (ie, Iceland, Liechtenstein, Norway and Switzerland) and Chile, and is currently conducting FTA negotiations with the Association of Southeast Asian Nations (“ASEAN”), Maldives, Georgia and Macau.
As a member economy of the Asia-Pacific Economic Cooperation (“APEC”), Hong Kong continues to work with other member economies to study issues related to the realisation of the Free Trade Area of the Asia-Pacific (“FTAAP”), which could accelerate regional economic integration and drive long-term economic development. In a recent press release, Mr. So noted that Hong Kong plans to continue to work closely with APEC member economies and participate actively in the relevant work plans of APEC in hopes of facilitating the early realisation of the FTAAP.
He also noted that Hong Kong has been closely monitoring the development of regional FTAs, including the Regional Comprehensive Economic Partnership (“RCEP”) which is one of the potential pathways to realise the FTAAP. The RCEP is currently the largest FTA negotiation in the Pan-Asia region. The combined GDP of the 16 RCEP participating economies, which are also important trading partners of Hong Kong, represents nearly one-third of the world’s GDP. As such, Mr. So indicated that the Government will continue exchanging views with its trading partners on the development of RCEP and other regional FTAs.
Message for Solicitors
Having heard reports from fellow practitioners of how competitive Hong Kong’s legal market is and remains, Mr. So encourages solicitors to explore opportunities that present themselves across the regional landscape through the Belt and Road initiative. “I truly believe that the Belt and Road initiative will be the next big source of workflow and opportunities for at least the next two decades.”
To assist Hong Kong’s professional services sector explore opportunities in foreign markets, the CEDB has developed and launched a new funding scheme called the Professional Services Advancement Support Scheme, or “PASS” for short. The HK$200 million Scheme provides funding support for non-profit making projects organised by local professional bodies amongst others, and aims to encourage the professional services sector’s pro-active outreaching promotion efforts and improvement in service offerings. Mr. So strongly encourages legal professional bodies to apply for funding. More background information about PASS is available at www.pass.gov.hk.
As for ideas on sourcing new business, Mr.So suggests solicitors look at providing services to start-ups and those supporting them. He also recommends looking for opportunities to assist those in the crossover space. “These are all developing business areas that will require legal support. Following the value where it is being developed is a great way to build a lucrative practice. I have always been a firm believer in competing in areas where there is a lot of head room for everyone. I think the ones I have mentioned are good spaces to watch,” he said.
1 The CEDB is responsible for various policy matters including Hong Kong’s external commercial relations, inward investment promotion, intellectual property protection, industry and business support, tourism, consumer protection, competition, telecommunications, broadcasting, film-related issues and creative industries, among others. In addition to the above policy responsibilities, the CEDB also oversees the operation of eight executive arms, namely the Invest Hong Kong, Intellectual Property Department, Trade and Industry Department, Hong Kong Observatory, Post Office, Office for Film, Newspaper and Article Administration, Radio Television Hong Kong, Office of the Communications Authority, and the overseas Hong Kong Economic and Trade Offices.