NEWSWEEK: How did you get the idea for the Cyberport? LI: It started with a casual chat. We have a couple of joint ventures, one with Intel, and we almost always lose our English and American engineers to our office in the States. They say on the [U.S.] West Coast they could find a reality check on any concept much quicker, much faster. If Hong Kong wants to develop anything of that sort, it’s got three problems. Rents are way too high. The environment–traffic and pollution–is getting bad. And Hong Kong never had a critical mass in high tech; it missed the hardware wave in information technology and the software wave. So we put forward the Cyberport. At the beginning, the government was not willing to spend the money building it, and later it evolved into a joint project.
How does it solve Hong Kong’s problems? Hong Kong rent is double Silicon Valley. The Cyberport would offer qualified companies prices based on the East Bay in San Francisco… a 70 percent discount to market rates in Hong Kong. To an extent it solves the quality-of-life issues, what about the kids, no place to go. I’m not saying there’s as much space as Silicon Valley, but the Cyberport environment is pretty nice. It’s low rise, and in some ways it solves the traffic problem because it is self-contained.
Why would big brands come to Hong Kong rather than, say, Singapore? Milton Friedman, the Heritage Foundation, Ayn Rand… many writers have said Hong Kong is the model free market. Now the IT [information technology] wave has come to applications, and Hong Kong has a great strength in services. Banks, accounting. Hong Kong’s GDP is now 87 percent services.
Isn’t a government-backed project like the Cyberport diluting the free market?
Subtracting from my admiration for Ayn Rand, nobody accepts that an extreme vision of the free market is good for all societies. Certainly the United States does not, if you look at the amount of grants given to Berkeley and Harvard every year. When you have a breakdown of the market, the government needs to help another industry start going.
So the Cyberport does represent a change in Hong Kong’s approach? No. But I would say that Hong Kong will not continue to be successful in IT if it stays with the complete hands-off approach. If you look at Asia 100 years ago, the British, to start off with, put in a good port. It has godowns [warehouses], dockyards. And Hong Kong was the only place that has [these facilities]. Hong Kong became the entry port to China, the center for trade in Asia. What is the Cyberport? It is like the port–the government would provide comparative advantage. It would not even put up cash. Hong Kong will re-emerge from the current recession, but [Chief Executive] Tung Chee-hwa would like to see us re-emerge one level more competitive.
How strong is the Hong Kong market for software personnel? I think Hong Kong creates very high-quality students, technically, but they lack creativity. This is such a cliche of Asian students, but it’s true. The Cyberport is similar to the Singapore type, trying to attract foreign companies. At the same time it is trying to provide space for 100 local companies with less than 50 employees. It is a very good catalyst. You would have to hire local people, and you would give confidence to the local graduates. If you see the GDP structure, if you’re not in investment banks, accounting or a lawyer, you’re nothing. It’s a terrible atmosphere. The entrepreneurial spirit for the technology side, that culture is not there. Hong Kong is not Israel. But hopefully that will change.
Can you elaborate on Singapore aspects of your model? Cyberport is designed to attract foreign funds; it was our idea, and I stand by it. It is like injecting a vitamin in the system. But Singapore started in the ’60s and is still very dependent on multinationals; in the long run I don’t think it’s a very good model. Hong Kong needs, as a second step, something similar to the Taiwan model, which is attracting returning students who gradually start their own local companies. So I think Hong Kong should adopt both a Singapore model and a Taiwan model, so they can start quickly but also have roots.
