Overview
- Hong Kong offers a favourable environment for the development of Internet and electronic commerce. As a regional trading and services hub, Hong Kong is where commercial activities take place day and night, serving both local and foreign companies. These commercial activities are supported by Hong Kong's excellent telecommunications and information technology infrastructure.
- The Internet contributed about HK$100 billion to Hong Kong’s economy in 2009, which Boston Consulting Group estimated to be around 5.9% of Hong Kong’s GDP. Such proportion is seen as on a par with many advanced European economies.
- Hong Kong ranked 1st in Asia and 7th in the world in 2010 in terms of digital economy, according to the EIU.
- In 2008, business receipts from selling goods, services or information through electronic means surged by 67.8% to HK$72.6 billion. About 20% of Hong Kong companies sold goods, services or information through electronic means.
- In March 2011, the full Chinese “.hk” Internet domain names (".香港") was officially launched. Hong Kong Internet Registration Corporation Limited (HKIRC) undertakes the administration of the “.hk” domain names.
Industry Data
|
|
2005
|
2006
|
2007
|
2008
|
|
E-commerce business receipts (HK$ million)
|
8,007
|
22,054
|
43,283
|
72,616
|
Sources: Report on 2009 Survey on Information Technology Usage and Penetration in the Business Sector, Census and Statistics Department
Business Receipts of Internet Connection Services (HK$ million)
|
|
2008
|
2009
|
|
Membership/registration/account set-up services
|
3.0
|
3.0
|
|
Basic connection services
|
-
|
-
|
|
- for dial-up account
|
19
|
3
|
|
- for leased line account
|
1,125
|
743
|
|
- for broadband account
|
4,943
|
6,295
|
|
Website hosting and related services
|
302
|
330
|
|
Other Internet related services
|
630
|
712
|
|
Total
|
7,021
|
8,086
|
Source: Report on 2009 Business Performance and Operating Characteristics of the Information and Communications, Financing and Insurance, Professional and Business Service Sector, Census and Statistics Department
Usage and Penetration of Information Technology in the Business Sector
|
|
2009
|
|
Personal Computers Usage
|
|
|
- Establishments using personal computer
|
63.6%
|
|
Internet Usage
|
|
|
- Establishments having internet connection
|
60.6%
|
|
Website Usage
|
|
|
- Establishments having webpages/websites
|
20.0%
|
|
Electronic Business
|
|
|
- Establishments having received goods, services or information through electronic means
|
60.1%
|
|
- Establishments having delivered goods, services or information through electronic means
|
20.1%
|
Source: Report on 2009 Survey on Information Technology Usage and Penetration in the Business Sector, Census and Statistics Department
Range of Services
Many use the Internet mainly for communication and information purposes. However, business transactions via the Internet (or e-commerce) are on the rise.
Business to Consumer (B2C) -- online consumerism
B2C e-commerce occurs when a company sells its goods or services to the consumer over the Internet. There are different kinds of B2C Internet sites in Hong Kong, including online stores, and sites offering financial services (particularly banking and securities), ticketing services and information services.
Business to Business (B2B) e-commerce -- online transactions among companies
B2B e-commerce involves companies using the Internet for making transactions with suppliers and services providers. This kind of transactions used to take place using electronic data interchange (EDI) over proprietary networks before migrating to the Internet. A number of B2B Internet sites have been established in Hong Kong. They usually involve standard commodities trading such as steel, sourcing activities or supply chain management.
Cloud Computing
Cloud computing allows companies to centralise their computational resources, such as data and software, in a secure computer network hosted on the Internet. Their staff can assess to the resources through connecting with the computer network. Cloud computing helps increase flexibility and mobility in assessing the resources “online”, while the “on-demand” practice helps lower the overall cost.
E-Government
In January 2000, the Hong Kong government enacted the Electronic Transaction Ordinance and established a public key infrastructure to enhance public confidence in the legality and enforceability of e-transactions. Hong Kong Post and Digi-Sign Certification Services Limited, wholly-owned by Tradelink, were the recognised public certificate authorities for e-transactions. Since April 2007, E-Mice Solutions (HK) Limited has taken up the operation of e-Cert services from Hong Kong Post Certification Authority (HKPCA). It assumes the full operating cost in providing the e-Cert services and is entitled to receive subscription and renewal fees from e-Cert subscribers.
In August 2007, “Gov.hk” was launched as an official entry point by the Hong Kong government for the local community to gain access to a wide range of information, including news, weather forecast, government policies, etc. To facilitate a wider dissemination of public sector information, the government launched an 18-month pilot scheme in March 2011, allowing free downloads of public facilities data and real-time traffic data available via a portal called Data.One.
Service Providers
Internet Service Providers (ISPs)
According to the Office of the Telecommunications Authority (OFTA), as of April 2011, Hong Kong had 186 licensed Internet service providers (ISPs). However, not all licensees operate an active business and the ISP market is dominated by a few major players. Hong Kong Internet Service Providers Association (HKISPA) is responsible for promoting the development of Internet infrastructure, and enhancing fair market competition.
Internet Content Providers (ICPs) and Portal Sites
In a broad sense, all Internet sites are ICPs. The success of a commercial ICP lies very much in whether its content is interesting enough to attract high hit rates (eyeballs), which may then be translated into revenue by attracting online advertisement. Moreover, some commercial ICPs also facilitate online transactions (usually of B2C type) to generate revenue.
Some ICPs specialise in one single topic and provide one-stop information search services. This kind of portal sites (including vertical portals) is a natural development in managing infinite information on the Internet. For example, hktdc.com is a leading trade portal to facilitate Hong Kong companies to expand business in international trade with marketing opportunities, business matching services and market intelligence.
Application Services Providers (ASPs)
ASPs deliver and manage applications and computer services from remote data centres to multiple users via the Internet or a private network. In other words, ASPs assist the companies to outsource their IT functions so as to concentrate their resources on their core business. It is expected that small and medium-sized enterprises (SMEs) would benefit most from ASP services. Besides technical support, ASPs in Hong Kong also provide integrated e-commerce solutions such as supply chain management to clients.
Industry Development and Market Outlook
Latest Development in Hong Kong
- According to Boston Consulting Group (BCG), the Internet contributed about HK$100 billion to Hong Kong’s economy in 2009, representing 5.9% of Hong Kong’s GDP. Such proportion is indeed on a par with many advanced European economies. BCG expected Hong Kong’s Internet economy to increase by 7% annually , which would likely be faster than the overall growth of Hong Kong economy.
- According to the digital economy rankings 2010, Hong Kong ranked 1st in Asia and 7th in the world in 2010. The ranking was conducted by Economist Intelligence Unit (EIU) based on the extent of ICT (information and communication technology) utilisation.
- With a 70% internet penetration rate, Hong Kong is among the highest in Asia. As at July 2010, there were over 2 million registered customers using broadband services with speed up to 1,000 megabits per second.
- In March 2011, the full Chinese “.hk” Internet domain names (".香港") was officially launched. Hong Kong Internet Registration Corporation Limited (HKIRC), which is a non-profit-making company, undertakes the administration of the “.hk” domain names.
- In 2010, Asia Pacific Carriers’ Coalition (APCC) released a study on Internet access prices within the region. According to the report, Hong Kong provided the most economical local broadband access services in Asia Pacific. Price of local leased lines dropping by about 30 50% between 2006 and 2009.
- The Internet has been widely used by Hong Kong shoppers, particularly the younger generation. Besides, it has been emerging as a distribution channel. According to a survey conducted by MasterCard Worldwide in 2010, almost half of the respondents in Hong Kong shop online. Over 70% of respondents who aged 18-24 purchase products or services on the Internet.
- As of December 2010, the GovWiFi programme had been set up in 390 government premises to provide about 2,000 WiFi hotspots. Since the full service was rolled out in June 2009, there has been robust growth in the number of GovWiFi service connections, while The monthly usage shows an average monthly growth of 7%.
China’s market outlook
- As at March 2011, the Internet connections on the Chinese mainland were around 800,000. According to China Internet Network Information Centre (CCNIC), China had 457 million Internet users in 2010, up 19% from 2009. Mobile phone WAP Internet users reached 303 million, increasing by 30% over 2009.
- The Internet continues to penetrate the daily lives of mainland people. The following table shows the extent of different Internet applications on the mainland.
|
Type of application
|
2010
|
|
Number of users
(in million)
|
Utilisation rate
|
YoY Growth
|
|
Search engine
|
375
|
81.9%
|
33.1%
|
|
Web music
|
362
|
79.2%
|
12.9%
|
|
Web news
|
353
|
77.2%
|
14.7%
|
|
Instant messaging
|
353
|
77.1%
|
29.5%
|
|
Online game
|
304
|
66.5%
|
15.0%
|
|
Blogging
|
295
|
64.4%
|
33.0%
|
|
Web video
|
284
|
62.1%
|
18.1%
|
|
E-mail
|
250
|
54.6%
|
14.6%
|
|
Social exchange webs
|
235
|
51.4%
|
33.7%
|
|
Web literature
|
195
|
42.6%
|
19.8%
|
|
Online shopping
|
161
|
35.1%
|
48.6%
|
|
BBS / Forum
|
148
|
32.4%
|
26.6%
|
|
Online banking
|
139
|
30.5%
|
48.2%
|
|
Online payment
|
137
|
30.0%
|
45.9%
|
|
Online stock trading
|
71
|
15.5%
|
24.8%
|
|
Micro-blogging
|
63
|
13.8%
|
-
|
|
Online Travel Services
|
36
|
7.9%
|
19.5%
|
|
Group buying
|
19
|
4.1%
|
-
|
Source: CNNIC
- Increasing Internet use among the SMEs on the Chinese mainland will generate opportunities for Hong Kong companies providing Internet-related supporting services. According to CNNIC, 94.8% of SMEs using personal computer, 92.7% of SMEs have Internet connection and 27.6% of SMEs have their own websites.
- Emergence of mobile Internet on the Chinese mainland will drive more companies to launch the mobile versions of their websites, which allow users to seek information and complete transactions via their mobile phones.
- Micro-blogging has been on fire lately on the Chinese mainland. According to CNNIC, 13.8% of Internet users have experience using micro-blogging. Both Sina Microblog and Tencent Microblog, the two leading microblog hosts, reported over 100 million registered users in 2011.
- In the first half of 2009, China’s online shopping transactions reached RMB119 billion, close to the whole year level in 2008. While shopping via C2C websites or platforms accounted for almost 90% of the share, shopping via B2C websites showed faster growth.
- Industry convergence will continue to shape the Internet landscape on the Chinese mainland. Companies or websites focusing on specific or individual Internet applications will leverage their influence to provide other Internet applications.
- Hong Kong companies have very good knowledge of and connections in the Chinese mainland market. This is an advantage over other foreign companies in seizing further opportunities in the mainland's online market. Also, Hong Kong companies can offer such value-added services as consulting, implementation, integration and training.
The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)
Under CEPA, Hong Kong companies can set up joint-venture enterprises on the mainland starting from October 2003 to provide 5 types of value-added telecommunications services without geographic restriction. These services include Internet data centre services, store and forward services, call centre services, Internet access services (ISP) and content services (ICP). Shareholding of Hong Kong services suppliers (HKSS) in the joint venture should not exceed 50%.
Under Supplement IV to CEPA that came into effect in January 2008, HKSS can set up joint venture enterprises on the mainland to provide Mainland IP-based Virtual Private Network Services as defined in the "Telecommunications business classification" without geographic restriction. HKSS’ shareholding in the joint venture should not exceed 50%.
Under Supplement VI to CEPA, the time limit for completing the content examination of imported online game products developed by Hong Kong is explicitly stated as 2 months, subject to provision of full supporting documents. In addition, Supplement IV allows HKSS to set up wholly-owned enterprises on the mainland to provide software implementation services and data processing services. Software implementation services cover the following: systems analysis services; systems design services; programming services; and systems maintenance services. In addition, input preparation services include data-processing and tabulation services; time-sharing services; and other data processing services.
Under Supplement VII to CEPA, HKSS can set up Internet culture business units and Internet online service business premises on the mainland in the form of contractual joint ventures, with the mainland party holding dominant interests.
As at end-May 2011, there were 41 approved HKSS in the sector of value-added telecommunications services, out of a total of 46 applications, and 16 approved HKSS in computer and IT related services.
