Hong Kong Cyberport refocuses on digital community

HONG KONG, China (CNN) -- Cyberport officially launched in 2004 as Hong Kong's $2 billion IT flagship with the mission to become a leading information technology hub of the Asia-Pacific region.

It won the Intelligent Building of the Year Award 2004 and 2005, and has since developed into a 24-hectare site hosting close to 100 IT companies and two university programs in four office buildings, one five-star hotel, a retail arcade and a deluxe residential development.

Four years on, what has become of Cyberport's silicon promise?

Veteran IT reporter Jimo's first impression of Cyberport when she visited last year was: "Property. Cyberport was not surrounded by labs or fabs, just apartments."

And yet, visionary founder and financier Richard Li himself has publicly insisted from the very beginning that Cyberport is "not, I repeat, not, property development."

Jimo resumes Silicon-Valley comparisons in terms of "culture": "Hong Kong people are usually best at the financial sector and service industries," she says. "Those from the U.S. are usually more innovative in technology, including marketing and long-term business development of IT. Hong Kong companies seem to focus on short-term goals without much consideration for long-term concepts, which is where real innovation lies."

Nicholas Yang, CEO of Cyberport since October 2003 and well-aware of his "inherited negative legacy," seeks to re-manage expectations: "We don't do R&D here. Period. That's a job for a high-tech science park. Our goal is purely on community and commercialization. The true link between technology people and businesses. That's what we want to focus on."

Staying out of the red

The Cyberport Project is the commercial enterprise of Hong Kong Cyberport Management Company Limited, which is a private limited company wholly owned by the Hong Kong Special Administrative Region Government.

As such, Yang is responsible for overseeing the development, management and marketing of Cyberport, as well as for formulating viable strategies to keep the venture out of the red. It has not been an easy task.

He cites among the main reasons for its previous financial losses the popping of the Internet bubble in 2000, followed by the exorbitant cost of early investments in high-end infrastructure and then-budding technologies such as open wifi.

Today, Yang says maintaining Cyberport's state-of-the-art infrastructure costs over $2.5 million every year. The good news is, at least now he can afford it.

But even more significant to Cyberport's teetering status was the SARS epidemic that hit Hong Kong at its heart in 2003, when 1,200 out of the 2,800 residential units expected to sustain the project were sold well below cost.

A cozy place for startups

While these past financial deficits have delayed development, Cyberport has since caught up with its renters and proudly boasts its own initiatives.

Events such as the annual Digital Entertainment Leadership Forum ("3D Cinema" is the theme on April 8, 2008) and Cyberport Venture Capital Forum (December) offer precious international business matching opportunities and insight.

Cyberport's four "facilitating platforms" (Digital Media Center, Wireless Development Centrex, iResource Center, IncuTrain Center) aim to provide tenants and visitors with the tools to further understand or explore developing new technologies.

While the highly popular Digital Media Center may be the most spectacular with its high-end equipment for virtual shooting, editing and post-production of digital cinema, it's the IncuTrain Center that truly testifies to Cyberport's "strategic clustering of companies."

Of the program's 42 "incubatees," 30 are on-site in Cyberport 3, all benefiting from support including free rent, highly subsidized training, equipment rental, marketing and legal fees, potential mentorship, international business matching and exchange programs, in addition to the obvious networking environment that comes with the strategically clustered location.

The only catch is, the incubation expires after two years. And as startups go, the market turnover rate already hovers around 80 percent.

In this context, 2-year-old Frenzoo, a social networking company developing 3D fashion and lifestyle avatars, is a model student.

From a three-person startup working out of a storefront in Sheung Wan -- an area close to the busy center of Hong Kong -- the company was successfully admitted to the IncuTrain program in Spring 2006, participated in a Cyberport-sponsored visit to Malaysia, won a Singaporean competition for best 2.0 company in 2007, recruited feedback "ambassadors" in mainland China and has since found a new investor in Skype.

Needless to say, the soon-to-graduate incubatee is now ready to leave the nest. The IncuTrain program was "perfect as an initial ramp," confirms Frenzoo co-founder and CEO Simon Newstead. "Now we're ready to succeed on our own."

Cyberport 4 is reserved for Hong Kong University's Cyberport Institute, directly supported by local industry partners Cisco Systems (HK), Hewlett Packard (HK), IBM (China/HK), Microsoft (HK) and Oracle (HK), which provides digital media training, along with Polytechnic University's MIRACLE program.

IncuTrain Center companies also benefit from the possible recruitment of on-site graduates, with respectively subsidized internship training and staffing.

CEO Yang says that Cyberport's focus over the next three to five years will be on digital lifestyle, "creating new business opportunities and new ways of working," hence cultivating the high-tech community.

Four years on, Cyberport's promotional digital acronym MEGA still stands for premium content in media, entertainment, games, advertising. "It's whatever flows in that broadband pipe that's meaningful," Yang reiterates.

A place for enterprise, but not a place to live?

Meanwhile on the pedestrian side of the plumbing, some tenants are still grumbling.

"Cyberport is quite picturesque, with lots of space and outdoor areas; however, the general lack of infrastructure within and around the location makes it frustrating and unattractive," remarks one particularly disgruntled employee, who has been commuting to Cyberport from the Kowloon side for the past two years.

"There is only one ATM for HSBC," she continues, "which is not fully operational, with no capabilities to deposit a check and often no cash. Everything costs more here, from lunch, to transport. In addition, general services, such as a doctor, are simply not available, and if they are, quite expensive."

Indeed, many of the more established companies situated in Cyberport offer their employees incentives such as additional financial compensation (up to 20 percent compared to the same position in a more central location), free shuttle buses (OMD, FedEx, Microsoft) to the subway or to nearby town Aberdeen, and longer lunch hours.

As for community, Cyberport continues to host informal family events such as Lunchtime Music Appreciation, outdoor movies and market days.

But outside the buzzing IncuTrain Center, it seems that "the majority of companies keep to themselves," says Disgruntled Employee.

She adds, "It's quite ironic that although Cyberport is supposed to be strong on IT infrastructure, many of our overseas associates have suggested that it would be more appropriate to change its name to 'analogue port,' given the number of technical problems we experience."

To which Yang's observation still resonates: "Anywhere else outside of Hong Kong, where do the high-tech parks spring up? I guarantee you, it's out in the boondocks... Why is Hong Kong so different? The convenience blinded us."

Always passionate about his job and devoted to his cause, Cyberport's CEO concludes: "We are trying to demonstrate a point on an intelligent community. That's our goal -- we're not there yet. But that doesn't make us a bad idea, or bad example, or even so, a bad community... The first person who came up with the idea might not be the best person to execute it, but they certainly had a great concept... I think it will prove itself." E-mail to a friend