November 28, 2005

Hong Kong's comeback bid awes Seattle visitors

HONG KONG -- The Seattle delegates strode, heels clacking, across gleaming black granite floors in a soaring glass-and-steel office building.

They passed an indoor "street" lined with trees and cafe tables, beneath an arching glass canopy two stories above. Outside, manicured gardens surrounded fountains, ponds and more modern buildings.

The campus would look snazzy even in tech-savvy Seattle. But this is the headquarters of the Hong Kong Science and Technology Parks, a technology "incubation center" that opened on the outskirts of Hong Kong last year. It certainly stood out amid the tired, decades-old apartment blocks in nearby Kowloon.

Much like Seattle's South Lake Union and North Bay projects, HKSTP is a bid by the government to revitalize the local economy.

That's right, Hong Kong's economy needs help. While mainland China is growing like gangbusters, the economy of Hong Kong, a city of 7 million, has just emerged from recession.

Poised between Guangdong province, mainland China's massive manufacturing hub, and the hungry U.S. consumer market, Hong Kong is well-positioned to handle much of that trade and the financing that goes with it.

But Hong Kong suffered a deep blow as a million manufacturing jobs moved away in the 1990s, shifting across the water to tens of thousands of factories sprung up on the mainland.

Just like the U.S., Hong Kong lost factory jobs to China's low-cost labor and vigorous embrace of market economics. Though nearly three-fourths of those Guangdong factories are owned by Hong Kong businesses, the migration had a big impact on employment in the city. During the recession, one in three Hong Kong residents under 35 was unemployed, according to officials.

Government invests billions

So Hong Kong's government, which is administered separately from the mainland, is spending on a scale that made Seattle visitors gasp. It spent $1.5 billion to build HKSTP and splashed out $2 billion more for Cyberport, another high-tech development.

"You get the feeling the government is racing to catch up," said Everett Mayor Ray Stephanson, a delegate on the China trade mission organized by the Trade Development Alliance of Greater Seattle.

Listening to the HKSTP sales pitch, Bill Stafford, president of the Trade Development Alliance, added dryly: "People complain about the minimal support for South Lake Union."

HKSTP has 3.3 million square feet of rental space, the equivalent of more than two Columbia Towers. It charges tenants $1 per square foot a month in rent.

The project doesn't just provide state-of-the-art office space, as South Lake Union and North Bay envision. It offers the computers, software and equipment a company needs to get rolling in four areas: integrated circuits, electronics, biotech and precision engineering. Software packages that cost $1 million can be rented by the hour.

Its motto: Just plug and play.

"After 1997, the government got pro-active," said John Lo, vice president of marketing for HKSTP. "It needed to convert high learning (from the universities) into applied companies."

Across the bay, Cyberport is like a small city, resembling the Battery Park City-World Financial Center complex in lower Manhattan. It has a million square feet of office space, 300,000 square feet of retail and 2,800 apartments in thin towers that shoot into the sky. Cyberport has sold 1,987 of them at an average price of $1 million apiece, raising nearly $2 billion, said Cyberport Chief Executive Nicholas Yang.

Success still uncertain

Cyberport is supposed to attract companies developing Internet and wireless technology. Wired with fiber-optic cable and connected to Hong Kong's three Internet backbones, it offers 10 gigabit per second connectivity, along with high-tech imaging, audio and wireless equipment for rent. It even has a Starbucks.

Both parks say they're doing well. HKSTP says its million-square-foot first phase is fully rented, and Cyberport says it is 55 percent full.

But it's unclear if either example of government investment will be a success.

Some critics call Cyberport a failed experiment, already passed by technology and trying to reposition itself. After failing to attract many of the small digital-content companies it sought initially, Cyberport wants bigger companies that could probably afford to locate anywhere. Microsoft has two floors in the main tower, and uses the office as a hub for Asian operations, especially intellectual property issues, said Nancy Anderson, a Microsoft vice president who is one of the trade mission delegates.

Still, given the government backing, the parks can afford to be a little choosy. Yang said the World Trade Organization wanted to set up an office at Cyberport. But Yang refused. "You have nothing to do with digital content," he told WTO officials.

Alwyn Scott: ascott@seattletimes.com

Posted by Al Scott at November 28, 2005 10:39 PM

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