Internet economy outpaces growth
Sector to be worth $146b by 2015; core businesses rewired, global reach boosted: Report
Hong Kong’s Internet economy has had a big impact on the city’s growth, having contributed HK$96 billion or 5.9 percent of gross domestic product (GDP) in 2009, a research report showed Wednesday.
The report, entitled “The connected harbour: how the Internet is transforming Hong Kong’s economy” by the Boston Consulting Group, said the GDP share of the Internet economy would grow by 7 percent annually, to reach HK$146 billion and contribute 7.2 percent of the city’s GDP by 2015.
“It is faster than the city’s 4 percent GDP growth forecast,” said David Dean, the group’s global leader for technology, media, and telecommunication practice, at a media briefing.
The report found that Internet had rewired businesses in Hong Kong’s core industries, such as trade and financial services, enabling them to change the way they interacted with customers as well as to streamline and expand their operations around the world.
Hong Kong’s millions of small and medium enterprises (SMEs), which account for over half of the economy, have also been empowered by the Internet to market their products and services globally, said the report which was commissioned by Google Hong Kong.
The group assessed that a third of Hong Kong’s Internet economy was contributed by consumption, another third by net exports of e-commerce and Internet-related hardware and the rest by government spending and private investment in Internet-related goods and services.
The 7 percent growth forecast for the Internet economy is conservative and the growth engine, namely consumption, will be driven by increased spending online and deeper mobile penetration, it was noted.
Software, hardware and services will continue to propel the territory’s Internet economy in private and government investment while business-to-business e-commerce will become one of the key drivers of growth benefiting from the mainland’s fast-growing export business, according to the report.
Hong Kong’s superior telecommunications infrastructure and its open online environment have helped the Internet economy to grow rapidly over the years, leading to enduring changes in consumer behavior, it said.
According to the Office of the Telecommunications Authority, as of March 2011, there were 186 Internet service providers in the city of 7 million people. Internet users total more than 4.8 million. Broadband has penetrated into 82 percent of households while the number of mobile subscriptions stood at 13.3 million, nearly double the population size.
Hong Kong’s Internet economy, worth 5.9 percent of GDP in 2009, was “just behind the 7 percent that manufacturing industry contributes”, Daniel Alegre, president of Google in the Asia-Pacific, wrote in the Wall Street Journal on May 3.
“It also matches the 6 to 7 percent that the Internet contributes to the UK and Nordic economies, which have a more ‘traditional’ dot-com industry akin to Silicon Valley,” said Alegre.
A Hong Kong government spokesman welcomed the findings, saying they reaffirmed the city’s position as a leading digital hub.
“These are strong indicators of the vibrancy of Hong Kong’s digital economy and recognition of government investment and liberalization policy in our Internet infrastructure, enabling extensive use of the Internet in key sectors of Hong Kong’s economy,” Chief Information Officer Stephen Mak said in an official release.
China Daily
(HK Edition 05/05/2011 page3)
http://www.chinadaily.com.cn/hkedition/2011-05/05/content_12446749.htm