September 19, 2024

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HKPC’s Roadmap for Green and Smart Manufacturing in Hong Kong

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The Hong Kong Productivity Council (HKPC) recently presented key findings from its “Hong Kong Manufacturing Industries Development Study Report,” providing an in-depth analysis of the sector’s current state, industry policies, and the upgrading efforts of Hong Kong-based manufacturers in the Greater Bay Area (GBA). This study aims to guide stakeholders toward opportunities for innovation and development while addressing key challenges. HKPC also introduced seven action proposals to reinvigorate Hong Kong’s manufacturing sector.

Image Credits: HKPC, Press Release

Hong Kong’s once-renowned manufacturing industry has largely moved overseas, but many companies retain key headquarters functions, evolving into service-oriented hubs. The 2023 national push for “New Productive Forces” emphasises high-quality green manufacturing and industrial innovation, but the sector faces challenges like intensifying competition, supply chain disruptions, customisation demands, and the need for sustainable practices. Nearly 69% of companies report that smaller, high-variety custom orders are becoming standard, while 67% face pressure to integrate green practices to stay competitive.

Technological innovation is identified as a crucial driver of transformation for the manufacturing sector. With global industrial strategies increasingly focused on tech-driven growth, Hong Kong is poised to leverage its innovative capabilities. The Hong Kong Special Administrative Region (HKSAR) government has been supporting this shift through policies aimed at boosting research and development (R&D), supply chain management, and industrial innovation, positioning the city as a key player in advanced manufacturing.

Two prominent trends are reshaping Hong Kong’s manufacturing sector. The first is smartification, where only 19% of companies have adopted smart solutions to meet the rising demand for customisation. While there is broad recognition of the need for flexible production, more than half of the companies lack sufficient strategies to adapt. The second trend is sustainability. Green manufacturing has become a global priority, and companies are increasingly pressured to adopt sustainable production practices. This includes energy management, carbon reduction, and ESG compliance. Businesses that successfully integrate these practices are better equipped to meet customer demand for environmentally friendly products, enhancing their market competitiveness.

Despite the relocation of much of its manufacturing operations, Hong Kong remains a hub for high-value functions like R&D, finance, and supply chain management. The survey shows that 31% of companies conduct R&D in Hong Kong, while nearly half manage global procurement from the city. These high-value activities reinforce Hong Kong’s strategic importance within the manufacturing ecosystem. Edmond Lai, Chief Digital Officer at HKPC, highlighted the role of smart technologies and collaboration with the GBA in fostering industrial innovation. He also emphasised the growth opportunities in green manufacturing, positioning Hong Kong as a leader in the global shift toward sustainable industrial practices.

In response to these findings, HKPC has proposed several strategic actions. These include developing “Microfactories” to enable agile, customised production; strengthening Hong Kong’s role as a headquarters hub, especially in R&D, financing, and global procurement; and fostering the Intellectual Property (IP) industry to spur innovation. HKPC also advocates promoting green manufacturing services, including ESG compliance and carbon neutrality certifications.

The Council stressed the need to recruit technical talent, develop AI-driven solutions through a large-scale model called ManufacturingGPT, and reshape the image of the manufacturing industry to attract younger talent. Through these initiatives, HKPC aims to align Hong Kong’s manufacturing with global trends and national industrial strategies, driving technological innovation, sustainability, and high-value-added services.

By focusing on these strategic areas, Hong Kong is well-positioned to lead in the future of manufacturing, fuelled by technological advancements and green industrial practices. These efforts will help the city maintain its status as a key player in the global industrial landscape.

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