Hong Kong’s Smart City evolution creates new digital transformation opportunities

November 2018

Hong Kong is making strides to transform into the Smart City of tomorrow. At this year’s Google for Hong Kong conference, we looked at numerous initiatives that are helping accelerate the city’s digital development and the marketing opportunities in some of the industries that will be impacted by this further digitization. Here are some highlights from the event.

According to Smarter Digital City 2.0, a recent white paper that Google published in partnership with Ipsos, only 30% of locals consider Hong Kong a smart city. At the Google for Hong Kong conference, many delegates also acknowledged a widening talent gap — there are not enough skilled people to work in a growing digital economy. Despite talent gaps, the city is on a pathway to become a leading Smart City in Asia, with various industries leveraging digital technologies to engage more consumers.

To create a Smarter Digital City, start with the three Es

For Hong Kong to experience digitization success, the city needs to focus on three key pieces:

  1. Ecosystem: The city needs to create a healthy ecosystem that allows different stakeholders to collaborate.
  2. Economy: A high-functioning economy offers strong incentive for businesses and citizens to adopt new digital initiatives.
  3. Education: Access to education is vital for any kind of Smart City development to take off.

The Hong Kong government is taking note. At the conference, Nicholas W. Yang, secretary for innovation and technology of the Hong Kong SAR government, highlighted several new SmartGov developments aligned with last year’s Smart City Blueprint goals. One key initiative is the HK$500 million TechConnect Block Vote for funding technology projects across government departments. Since its launch in mid-2017, more than 40 projects from 20 government departments have benefited. To support private sector technology development, the government has approved HK$116 million through the Technology Voucher Program since November 2016. Around 850 private-sector technology-adoption projects have been funded so far. The initiative can help accelerate small- and medium-sized enterprises’ digital transformation.

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A population with shifting expectations

Despite the lack of talent trained for a digital workplace, Hong Kongers have a strong desire to learn — 80% of residents of all ages are willing to learn new, advanced digital skills, especially in machine learning, app development, and data analytics.

Currently only 14% of Hong Kongers believe that tech talent development is one of the city’s strengths. In response to this, we’ve partnered with local initiatives such as offering free digital skills training on the Digital Garage platform and expanding CS First, a program that has already introduced more than 1,000 Hong Kong kids to the joys of coding.

More notably, we’ve seen a significant increase in digital savvy among those between the ages of 55 and 64. This opens up a big opportunity in the senior resident category for marketers — as more people in this age bracket develop digital skills, Hong Kong can develop into an idea testbed for digital initiatives aimed at seniors.

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As industries adapt, digital opportunities grow

As people’s expectations in Hong Kong change, various industries are impacted. And as they change, digital marketers can access new ways to engage with their customers. Three sectors can benefit from adapting to certain tech developments:

The travel industry in Hong Kong has significantly improved its digital adoption by 11% from 2017. That’s not surprising because 98% of travelers search for information online before going on trips. The issue, though, is that all these people drown in too much information.

The role of search plays a significant role for any traveler, according to Jackey Yu, an associate partner at McKinsey & Company; it provides travelers with firsthand experience of the brand. Travel marketers have an opportunity to give the right information at the right time and to improve the overall brand relationship with their target audience with customized content. Hong Kong brands like Cathay Pacific, HK Express, and Rosewood Hotel Group are already making personalization part of their brand promise.

Digitization in the finance sector grew to 38% in 2018, with some companies creating new opportunities through data-based marketing.

Kevin Tsang, head of corporate marketing at United Asia Finance, showed how his company is using machine learning to gain new insights from its large data pool. Through a partnership with Google, the brand customized messages to unique consumer segments. This resulted in a 77% increase in loan applications and a 15% growth in average loan size.

We found that Hong Kongers’ preference for in-store shopping contributed to a slight decline in retail digital engagement. It also offers new opportunities for marketers to explore unique digital opportunities.

At the conference, local jewelry brand Chow Sang Sang described how it took advantage of artificial intelligence to develop a data-driven creative campaign that automated the creation of dynamic creative ads at scale to optimize its O2O funnel. The campaign resulted in a 3X higher monthly conversion rate for the company.

A Smart City still in its infancy

While the Google for Hong Kong event highlighted new opportunities to engage in digital marketing, the city spends just 24% on digital marketing, compared to China’s 65%. As the city advances its adoption of new technologies and digital tools, it’s important for brands to adapt to these changes and engage with Hong Kong’s ever-developing audience.

To learn more about our initiatives and read the white paper in full, please visit the Google for Hong Kong site.

Smarter Digital City 2.0: Smarter Retail