It is hard to think of Hong Kong under any other light than in financial terms, especially in light of the looming US-China Cold War. After all, Hong Kong is where “East meets West”; where investors from the West enter China, and where Chinese capital flows outwards and upwards. For many, Hong Kong is the New York of the East – an international financial centre that stands as a towering giant amidst regional counterparts that are dwarfed by the gem’s capital mobility, civil liberties, dynamic multiculturalism. All of these attributes seem antiquated – if not obsolete – in light of the current zeitgeist.
It’s easy to overlook Hong Kong’s pivotal role, precisely in relation to this COVID-19 Pandemic. A corollary of Hong Kong’s status as a global financial hub is its potential of serving as a global bio-tech hub. Hong Kong remains a shining beacon for many of its rivals, with the number of daily new cases dwindling to single digits or even zero, and the city playing a leading role in propelling global research efforts.
I had the pleasure of visiting Hai Kang Life Corporation a few weeks ago, as part of my field research for my weekly column in the Hong Kong Economic Journal, on the best political and scientific practices in the global struggle against COVID-19. I was astounded by the level of sophistication and competence on full display at the company’s multi-storey research lab. Its founder, Dr. Albert Yu, a leading academic (amongst the few veteran scientists based at Hong Kong who regularly appear on CNN), showed me around his spacious workspace, and offered some illuminating first-hand insights into Hong Kong’s capacity as the ground-zero for revolutionary medical, scientific research.
Hong Kong as a financial centre
Firstly, Hong Kong offers bio-tech companies – including unicorns, start-ups, and established firms – a stable and reliable source of financial capital to partake in potentially risky research moves. The Special Administrative Region remains – despite its civil unrest and political turbulence – a leading choice for large companies and multinational technology firms seeking Initial Public Offerings (IPOs). New rules introduced on April 30 2018 enabled pre-revenue biotech firms (i.e. tech companies that have yet to begin accruing revenue) to apply for IPOs, so long as they were valued at HK $1.5 billion or above, backed up by senior investors, and had made some reasonable headway in early-stage research. Such loosening of conditions rendered it easier for scientists and researchers – particularly those lacking both connections and the seed capital to get research off the ground – to raise the necessary capital for hiring administrative and technical staff, setting up office in Hong Kong, and establishing rigorous experimental conditions for extensive sampling.
Hong Kong’s legal infrastructure, rule of law, and structural emphasis upon transparent and accountable governance – whilst indubitably with some shadows cast over them by recent events – assure prospective investors that their capital investments and legal commitments are well-protected, with contracts and agreements enforced strictly within the city’s internationally accredited Common Law jurisdiction (in stark juxtaposition with that of the rest of China).
Those familiar with bio-tech start-ups are likely to recognise the substantial overhead costs and significant risks associated with specialised or non-generalised research. As Dr. Yu notes, the scientific processes involved in constructing viable and dissemination-friendly test kits, refining testing methods (e.g. pooling samples for preliminary-stage testing to reduce the amount of time needed to identify positive results), and synthesising existing tests in producing an all-in-one “Bio-Radar” are all highly financial capital-intensive – from acquiring raw ingredients to implementing rigorous safety checks, from assembling biohazardous contents to systematically rolling out clinical trials
It doesn’t take much political acumen on the part of the government to recognise Hong Kong’s potential; transforming it into lucrative reality, on the other hand, is a different matter. Indeed, Paul Chan, the city’s Financial Chief, has himself pledged, “With biotech and other sectors of the new economy in mind, we have reviewed our listing regime looking for ways to develop broader fundraising capabilities.”
Such transformations are likely to pick up traction over the course of 2020, as biotech companies around the world race to identify the much-needed cures and remedies for the persisting COVID-19 outbreak. . Ideally, the city’s unrivalled access to capital from East and West provides firms with easy targets for pitching and outreach, but also offers High Net-worth Individuals (HNWIs) the sturdy advisory and asset management infrastructure to support their profiteering ventures. Yet in order to preserve its strategic advantage, Hong Kong must confront looming questions and assuage investors’ concerns over its political future and judiciary independence.
Hong Kong’s exceptional human capital
A second critical strength of the city is its highly concentrated human and academic capital. The city of 7.4 million contains eight public universities, with three universities ranking in the top 100 in the world, both in general and in biological sciences. The city’s two premier scientific-research/start-up hubs – Science Park and Cyberport – are located a stone’s throw away from its two leading universities, Hong Kong University and the Chinese University of Hong Kong. Hong Kong’s education system yields a top crop of talents stepped in both English and Chinese education, with a keen thirst for knowledge and reasonably strong language skills. Graduates from the city’s science departments are internationally competitive, no less aided by regular exchanges with the mainland and international counterparts for undergraduate programmes.
Many of the city’s – as well as the rest of China’s – leading tech companies draw heavily from these universities’ academic faculty and graduates. For example, Imsight Medical Inc. (one of the top 50 A.I. companies in China) was established by professors and PhDs from Hong Kong; Hong Kong also serves as the site for the headquarters of SenseTime – the world’s first AI unicorn, valued at over $6.75 billion. One of the latter’s co-founders is a professor at the Chinese University of Hong Kong. This in turn spurs the question: why, then, could such an illustrious record not be replicated in the bio-tech sphere?
There exists no reason to think so – replication is indeed feasible, and ongoing. It is undeniable that a sizeable portion of the city’s biotech talents ends up deserting the city for better prospects elsewhere. This all the more behoves the city’s administration to look into ways to retain its human capital – whether it be through subsidising small and medium bio-tech start-ups, or investing in broadening access to STEM studies amongst the socioeconomically disenfranchised in Hong Kong. It is high time for the city to answer – as opposed to neglect or even evade – the needs and preferences of aspiring scientific talents, whether this be taking the form of consolidating its academic and conferencing infrastructure, improving quality of life for expat workers, or reforming the city’s patent laws to maximise lucrativeness of research and development.
Reimagining A Post-COVID Hong Kong
Hong Kong was dealt a heavy blow by SARS (Severe Acute Respiratory Syndrome) in 2003. For many of the city’s residents, the ’03 pandemic remains a hallowing episode that few would enjoy discussing, let alone remembering in detail. Yet if there’s one thing that all Hongkongers have absorbed from the crisis, it’s certainly the importance of bracing for unknown unknowns, to borrow Rumsfeld’s words. Having endured substantial collective trauma seventeen years ago, the Hong Kong public has evolved into highly vigilant and health-conscious citizens, demarcated by an astonishing level of civic self-discipline.
The city has an impressive track record as a regional bio-tech hub. Hai Kang, alongside its contemporaries, was the first company in the world to develop and mass-produce statistically rigorous testing kit for SARS. The Enhanced RT-PCR (ERT-PCR) was pioneered back in 2003 by Dr Yu, when the SARS epidemic first struck Hong Kong. At the time, a specific diagnosis of SARS was difficult because its initial symptoms were similar to those of other common respiratory diseases. The ERT-PCR was therefore designed with higher sensitivity – as compared with its contemporary rivals – for the detection of SARS-CoV, with its detection limit hundred times higher than the standard RT-PCR test.
It is likely that COVID-19 is here to stay: social distancing and quarantine measures are unlikely to be sustainable over extended periods; should the disease indeed be seasonal (although this is unconfirmed, as recent reports in The Lancet have cast this observation in doubt), there exist good reasons to believe that it could well resurge in the Northern Hemisphere during the winter seasons; a vaccine – even by the most optimistic estimates – would only arrive in 2021. The disease’s clandestine nature (it is extremely difficult to detect, as carriers can transmit the disease whilst asymptomatic, and its early onset symptoms are highly similar to those of the common flu) renders it nigh-impossible to eliminate. More fundamentally, as the epidemic spreads to areas of poor sanitation and hygienic awareness, it is likely that the number of individuals afflicted by the disease will rise well above the current total of 6.8 million (as of June 7 2020).
Thus the response must necessarily involve a heavy amount of (precise, and ideally cost-effective or cheap) testing. Tests are the de facto prerequisite (necessary but insufficient) for permanent ending of social distancing measures, for it allows countries to manage and monitor the health of its citizens. Whilst such monitoring progammes do not necessarily have to take the form of the extensive, surveillance-driven health regime adopted by China (where citizens’ ability to access and use spaces is contingent upon their health statuses, in turn tracked by an App that is mandatorily installed by all of the country’s 14 billion citizens), it is likely that to restore “normal” economic operations, countries must allocate significantly more resources to ensuring that ill citizens are quarantined, isolated, and treated efficaciously. Tests provide them with the wherewithal to do so – with tests, countries can screen out healthy citizens and concentrate resources in areas worst-afflicted by COVID-19.
Countries must start contemplating what their exit strategy from COVID-19 looks like – and Hong Kong indubitably has a role to play. Irrespective of the wider geopolitical tensions and uncertainty, the city remains a promising innovation hub, with infinite potential for ground-breaking and publicly utile bio-medical research – at least for now.
Brian Wong, 09/06/2020