High-Tech and Telecommunications in Hong Kong

Hong Kong's role as a leading business center in the Asia-Pacific region owes much to its advanced telecommunications infrastructure. The role of telecommunications is especially vital to Hong Kong's competitiveness as a hub for foreign companies and it's ability to facilitate trade around Asia. This creates significant opportunities for Israeli companies and their innovative products.

Hong Kong's telecommunications industry is totally privately owned and faces little restrictions on foreign investment. Most telecommunication services are open for competition. Hong Kong is thus well ahead of others in the region in liberalizing the telecommunications market.

Telecommunications ranks as one of Hong Kong's most dynamic and technologically advanced industries, playing an integral role in Hong Kong's development as an international business center. The Hong Kong government places an increasing emphasis on information technology and IT-based industries. Hong Kong¡¦s core telecommunications infrastructure has been digitalized since 1995 and leads the region in terms of international call time, the penetration of telephone lines, mobile phones and fax machines. It operates Asia's largest satellite earth station and is connected to more fiber-optic cables than any other Asian economy. Hong Kong also has a highly developed wireless market and has commenced with "3G" services in the beginning of 2004.

One area of significant change has been the external facilities market. In 2000 the Office of the Telecommunications Authority (OFTA) awarded 12 licenses for satellite-based external fixed telecommunications network service (EFTNS) licenses. In addition, they have issued eight cable-based EFTNS licenses, five for submarine cables and three for land cables to Shenzhen, China. This development provides a solid infrastructure to support the rapid development of new and innovative information technology and telecommunication products and services.

Telecommunications products and services are in demand as Hong Kong continues to liberalize its telecommunications market. Interest in computers and other information technology products remains high given their high priority in the government¡¦s agenda, and given the anticipated growth in electronic commerce. Hong Kong¡¦s Cyberport and Science Park inaugurated in June 2002 will also bring additional interest for these products.

In general, Hong Kong total Export of Information Technology & Telecommunications equipment (excluding TV & Radios) in the year 2003 was 28b US$, mainly to China, USA, Singapore and UK, total imports in the year 2003 was 29b US$, mainly from China, Taiwan, Korea and Singapore and Japan.

More small and medium-sized enterprises plan to invest in VPN (Virtual Private Network) solutions in the next 12 months than in the past year. The survey findings show that service providers are taking a large portion of companies¡¦ VPN investments, overall 52 per cent of planned VPN investments will go to this group. The top three service providers that companies with a budget for VPN investments are considering working with are PCCW, CPC Net, and Hutchison Global Crossing. Other service providers were also mentioned, but by less than 10 per cent of companies.

Infrastructure Data for November 2003:

1) There are 8 Fixed Line companies and 2 wireless FTNS with 3.8 million exchange lines, full portability of telephone numbers for fixed telephone users. 502,585 fax lines. The telephone density was 56 lines per 100 people, the highest in Asia., about 470 million minutes (telephone traffic) per month. Telephone traffic growing by an average of 13% per annum.

2) 211 companies with licenses for International calls and external services.

3) The International Direct Dialling (IDD) service is available to over 233 countries and 2,200 Mainland cities. A Hong Kong person made an average 514 minutes of international calls in 2001.

4) 6 cellular companies operating 11 networks of GSM, CDMA and TDMA with 7.1m subscribers in Dec 03, representing a penetration rate of more than 100%, one of the highest in the world.

5) According to figures released by OFTA, it is encouraging that the number of 2.5G/3G customers has reached 963,514 on Feb 2004. Compared with total number of non-Prepaid SIM subsrcibers, the penetration rate was 21.5%

6) In Feb 2004, the number of SMS sent and received are 70M and 138M respectively, more than double the number a year before.

7) 206 ISPs with 2.7 million subscribers. There are over 43,000 .com.hk domain names and over 1,700 dot com companies and 5,800 IT and technology companies.

8) All commercial buildings and 95% of households have broadband coverage. 53% of households and 44% of business have internet connection.

9) Hong Kong is connected to 9 submarine cable systems and 3 overland systems, with over 400,000 kilometres of fibre optic cable.

10) 4 licenses for 3G operators and 6 MVNOs. 2.5G/3G customers has reached 844,759 on Jan 2004. There is 15% increase from Dec 2003.

11) 5 licenses for Wireless Local Loop

12) 12 licenses for satellite-based external fixed telecommunications network service (EFTNS) licenses

13) 8 cable-based EFTNS licenses, 5 for submarine cables and 3 for land cables to Shenzhen, China.

14) International telecommunications capacity to Hong Kong, estimated to be about 44Gbps (only 7.1Gbps activated) at the end of 2000.

Israel and Hong Kong

Hong Kong is Israel¡¦s largest trading partner in Asia and Israel is Hong Kong's 2nd largest export market in the Middle East. In 2003 overall exports from Israel to HK were 1.4$US billion which is 8.8% higher than last year. Import from Hong Kong was 889$US million.

It is well known that Hong Kong and Israeli telecom companies have been involved in technologies exchange and collaboration for years. Israeli Export to HK in IT and Telecommunications equipment was 39.8mnUS$ in 2003 and Israeli imports of IT equipment and telecom from Hong Kong were 60.9mnUS$ in 2003.

Israeli activities in Hong Kong are based on 65 Israeli companies with regional headquarters in HK, 34 of them are High-Tech companies. In addition there are local agents and distributors, Israeli investments and joint ventures. Israel and Hong Kong have signed an R&D agreement and investment protection agreement. Hong Kong companies have invested about 250mnUS$ in Israeli start-ups and Venture capital funds. The most significant investment is of Hutchison Whampoa with 43.27% of Orange Partner in Israel.

Industry Websites

Tenders for government projects, Government Supplies Dept: www.info.gov.hk/gsd

The Apec telecommunications working group- www.apii.or.kr/apec/main.html

Asia pacific telecommunity ¡V www.aptsec.org

Hong Kong Internet service providers ¡V www.hkispa.org.hk

Hong Kong SAR government Information center ¡V www.info.go.hk/eindex.htm

Hong Kong telecommunications Users group ¡V www.hktug.org

Office of the Telecommunications Authority ¡V www.ofta.gov.hk/default.htm

The telecommunications Infotechnology Forum ¡V www.trp.hku.hk/tif/home.html

The telecommunications Research Project ¡V www.trp.hku.hk

Television and Entertainment Licensing Authority ¡V www.info.gov.hk/tela/

Internet & Telecom Association of Hong Kong ¡V www.itahk.org.hk

Commerce, Industry and technology ¡V www.info.gov.hk/citb/ctb/

Wireless data - www.ofta.gov.hk/datastat/eng_wireless.pdf

Hong Kong as Gateway to China

China is the fastest growing economy in the world
Although the accession to the WTO, there are still many trade barriers for foreign companies. CEPA (Closer Economic Partnership Arrangement), has been signed giving HK further advantages in China.
Hong Kong Provides:

Proximity to the mainland while maintaining an international base.
A sound common law type legal system
Expertise in finance, trade, accounting, management and legal business with china
Close business, cultural and linguistic ties with china.
Extensive sales and personal networks in china
International standard infrastructure.