GS1 Hong Kong’s Recommendation to Budget 2019-2020

GS1 Hong Kong welcomes and supports the overall Financial Secretary’s direction on “supporting enterprises, ensuring employment, and stabilizing the economy” in preparing the upcoming financial plan 2019-20. Meanwhile, GS1 would like to make a series of suggestions regarding supportive measures to small and medium enterprises (SMEs), such as supporting them with adoption of innovative technology, strengthening their e-commerce development and integration to the development of Greater Bay Area, and also training and development for a wider pool of talents. All these suggestions are made with a view to help Hong Kong enterprises cope with the potential economic slowdown in the coming year.

Measures to Support SMEs 
 

1) Enhance funding to SMEs

On 1st August, 2018, the Government rolled out enhancement to the “Dedicated Fund on Branding, Upgrading and Domestic Sales” scheme by increasing support for conducting businesses with ASEAN and the Mainland. We are delighted with the announcement.

Other enhancements we would recommend to existing Government funding schemes include: (1) increasing the cumulative ceiling of the “SME Export Marketing Fund” (EMF) grants, as well as streamlining its application procedures and shortening the processing time; (2) resuming the “Special Loan Guarantee Scheme” (SLGS) under the “SME Loan Guarantee Scheme”, to help SMEs tide over liquidity problems by offering insurance with lower premiums, higher insurable value and longer period of insurance.
 

2) Support SMEs in Adopting New Technology

SMEs often lack resources to adopt new technology. Though the Government now provides with Technology Voucher Programme (TVP), broader and more specific measures can be implemented to help SMEs enhance business efficiency and explore new market opportunities.

1. Offer tax allowance over expenses on adopting innovative technologies such as Artificial Intelligence (AI), automated manufacturing system and big data analytics tools. This will not only enhance business productivity, but also foster development of the local innovation and technology industry.
2. Promote the innovative use of IoT technologies: More Government funding is needed to promote IoT adoption, particularly to showcase the usage of the technology in various industries through organizing large-scale IoT exhibitions.

3)upport SMEs in Developing e-Commerce Business and Expanding Overseas

Despite the Government’s effort in promoting benefits of e-commerce among SMEs, they still lack the knowledge in digital technologies and understanding of overseas markets to be active in e-commence. As a reference, the Singapore Government has launched the SME e-Commerce Accelerator Programme last year to help retailers build integrated strategic plans for omni-channel implementation, that would provide some learnings to Hong Kong. More specifically, we have the following suggestions to the Government:

1. Widen the scope of existing government funding schemes, including Technology Voucher Programme (TVP) and Retail Technology Adoption Assistance Scheme (ReTTAS) etc., to provide SMEs with fundamental trainings on e-commerce, so they understand how e-commerce provides new business opportunities. Provide two-year support for SMEs that launch their businesses on third-party e-marketplaces by subsidizing product listing fee and logistics management to ensure smooth running of their online businesses.

2. Provide financial aid to SMEs in leveraging third party e-marketplaces, with the capability to offer inventory management and delivery services, which helps SMEs enhance their supply chain and improve efficiency.

3. Hong Kong brands are well-known for their top quality, high efficiency and reliability. We suggest that the Government should provide incentives for local businesses to adopt technologies that strengthen the “Hong Kong Brand” elements in their products. For example, by adding barcodes to their product packaging allows overseas e-commerce consumers to authenticate a “Hong Kong Brand” easily and helps build consumer trust. In case a counterfeit barcode is scanned, the brand owner will be notified immediately through the system and can take remedial actions more quickly to protect their consumers and the brand. Furthermore, these barcodes can capture consumer behavior for big data analysis, which provides in-depth consumer insights for designing better shopping experiences.

Foster the Development of Industries in Greater Bay Area
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1) Open Platform for Food Traceability

In the view of increasingly complex supply chains, we hope the Government can provide subsidies to encourage the food industry to establish an open platform that provides data interoperability, with a pilot launch in the Greater Bay Area. Product traceability is evermore important for the food supply chain. Through the establishment of an open platform, trading partners and the Government can retrieve up-to-date information in the entire supply chain, from country of origin to various point of sales to protect consumers. An increased transparency in the food supply chain of Greater Bay Area can further protect consumers.

GS1 Hong Kong will take a proactive action to foster the establishment of standardised information and open platform for data interoperability and traceability in the Greater Bay Area. We have worked closely with Centre for Food Safety for the adoption of global data standards on reciprocal food alert to enable faster communication for its “Rapid Alert System”. We are now in discussion to further enhance the efficiency of the system, which allows brand owners to trace the entire supply chain, from country of origin to end consumers. This can therefore enhance operational efficiency and ensure food safety.

We hope the Government can take an active role in implementing the reciprocal food alert system in the Greater Bay Area, which in turn enables the effective communication of food safety incidents among the Greater Bay Area cities, and benefits the Greater Bay Area with good reputation in food safety, while at the same time strengthen consumer trust.

2)Trade Single Window

We believe the Government should provide additional funding to facilitate the implementation of Single Window. While Phase 1 of the Trade Single Window has already been launched, we hope the Government can consider providing subsidies for enterprises to implement the Single Window in different phases of launch, for example by waiving charges on document submissions required by various government departments. This will encourage active participation of enterprises, and hence pander to China’s plan in establishing a nationwide Trade Single Window in 2020 and achieve inter-connectivity among the Greater Bay Area and Belt & Road countries.

We also recommend the Government to set up a training fund to educate SMEs on Trade Single Window implementation and other hardware requirements in order to enhance digitalization of the SME sector.

3) Measures to Nurture Innovation and Technology Talents

In view of the severe shortage of ICT talents in Hong Kong, the Government should devise a long-term plan on talent development with an aim to bring forth structural changes to the workforce and be fully prepared for future market needs.

We recommend that the Government should offer financial assistance or tax deduction that encourage SMEs to take part in talent development initiatives, such as summer internship programmes that allow students to gain practical skills and experience at work. In the meantime, the Government can consider relaunching the SME Training Fund or expanding the coverage of the Reindustrialisation and Technology Training Programme to include trainings on business applications of latest technologies such as IoT, Artificial Intelligence, Cloud Technology, Blockchain Technology, Data Storage and Analysis, Information Security, etc. By offering such trainings, employees can upskill themselves with new technologies to meet demands of an era of transformation, as well as and support their companies in developing Smart Operation models. More importantly, this can create structural changes to the local workforce to propel the digital economy.

As stated by Mr. Paul Chan, Financial Secretary of HKSAR, the government’s budget surplus in 2019 is estimated to be around HKD40 billion. GS1 Hong Kong believes the Government is financially adequate to implement the abovementioned recommendations in order to ease up burdens on enterprises and nurture industry talents in the long-run with the ultimate goal to enhance economic growth and sustainable development of Hong Kong.

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