Navigating the Shift: How Hong Kong can Turn GenAI Challenges into Advantages

While Generative Artificial Intelligence (GenAI), enabled by pre-trained Large Language Models (LLMs), is revolutionizing various industries, Hong Kong is also capitalizing on the power of LLM to drive growth and innovation across multiple sectors.

Hong Kong Science and Technology Park Corporations (HKSTP) has cultivated a vibrant ecosystem that brings together AI startups, corporate partners, and potential investors.  This platform is paving the way for fundraising and partnerships opportunities in this rapidly evolving space.

The Budget Speech announced in February of this year mentioned that the HKSTP is about to launch a “Co-Acceleration Programme” Fund, in collaboration with private sector partners, to focus on opportunities in GenAI, as well as two other rapidly growing sectors. Currently, the fund is undergoing licensing processes with Hong Kong Securities and Futures Commission (SFC).

At a recent roundtable discussion hosted by HKSTP, Hong Kong-based investors gathered to navigate the strategic implications of investing in the GenAI value chain, finding themselves at a strategic crossroads, paving the way of the launch of the Co-Acceleration Programme. Ernest Ma, representative of HKSTP’s Co-Acceleration Programme, emphasized that the city has a unique chance to seize the initiative and establish itself as a leader in the commercialization, application and investment of these technologies.

Participants include industry leaders like HKT CEO of Consumer Group Bruce Lam, Gobi Partners Managing Director Tony Tung, 3Cap Founder Esther Wong, Mindworks Venture Founder David Chang, IBM General Manager Mimi Poon , Amazon Web Services (AWS), and ZTE are seizing the opportunity presented by GenAI. These companies are investing heavily in developing the GenAI ecosystem, allocating resources to unlock its promise.

In recent years, the global investment landscape has also undergone a significant shift, driven by major tech entities and venture capitalists actively supporting AI startups and innovators, fuelling a surge in financial commitments.

Commercialisation of GenAI for success

Generative AI is advancing rapidly, with applications in offices, images, videos, and marketing. Recently, OpenAI, the parent company of ChatGPT, raised new funding, boosting its valuation to $157 billion and underscoring the potential of this technology.

Despite the vast potential of GenAI, investors are assessing the entire value chain for opportunities in GenAI. Specifically, they are scrutinizing the foundational infrastructure that enables training and deployment of LLMs, including compute power and energy efficiency considerations.

In terms of AI compute, the industry is heavily reliant on specialized chips. Energy consumption emerges as a significant cost burden for LLM training, prompting forward-thinking investors to seek out sustainable energy solutions.

Hong Kong may not yet be a dominant player in the training of cutting-edge LLMs, AI chip development, or energy efficiency. While all AI applications require cutting-edge LLMs, domain-specific models can be built on proprietary algorithms and datasets, allowing startups to carve out niches, establish barriers to entry, and differentiate themselves from larger competitors.

Industries leaders leverage GenAI for business excellence

As LLMs continue to acquire external knowledge and become finely tuned, they are no longer a one-size-fits-all solution. In response, businesses are also opting for tailored approaches that engineer specific use cases to meet their requirements.

“The prime example of this,” says one of the AI Specialist participants, ‘one of our local partners in the advisory sector has successfully leveraged an LLM to generate high-quality reports. This level of sophistication can drive a new era of efficiency, empowering professional services to deliver even greater value to clients.”

As LLMs revolutionize industries, enterprises and organizations will increasingly rely on them to reimagine their business practices.

“However,” says Mimi Poon, General Manager of IBM, “relying solely on a single LLM can create vendor lock-in risks and limitations. Reliance on a small number of pre-trained LLMs may not be the most strategic approach to AI adoption. In contrast, workflow-based architectures offer a more agile and future-proof approach to harnessing AI capabilities from different models.”

Bruce Lam, CEO of HKT Consumer Group, notes that as GenAI becomes increasingly mainstream, HKT is leveraging GenAI for product recommendations, personalized marketing, automated sales support, conversion rate optimization, and enhanced customer shopping experiences.

HKT is partnering with several HKSTP startups, including FCC Analytics, AiR World and imBee, to co-develop innovative use cases that demonstrate the tangible value of GenAI in real-world applications.

GenAI Adoption Powers Disruptive Startups

Three HKSTP startups also shared their expertise and insights at the round table, highlighting  how GenAI is applied in different verticals.

FCC Analytics, a RegTech pioneer, has developed cutting-edge compliance solutions for financial institutions. Their AI model leverages federated learning to detect money laundering with remarkable accuracy by sharing information across banks while upholding privacy. Co-founder Wallace Chow revealed that they use GenAI to create personalized dialogue for new staff, ensuring a thorough understanding of banking policies and procedures. FCC Analytics’ solution is uniquely positioned to meet all regulatory requirements set by the Hong Kong Monetary Authority.

Another startup, imbee, is building an AI-powered omnichannel message platform that utilizes GenAI for customer service, sales support, conversion, and internal training. Ken Chu, Co-founder & CEO of imBee, emphasized that GenAI solutions can significantly reduce labor costs, with potential savings reaching up to 90%.

AiR World applied GenAI in a unique way by helping brick-and-mortar stores build customer engagement. By enhancing customer experiences, the company’s GenAI solution offers an alternative to traditional marketing tactics. Gabriel Kwong, Co-founder & CEO of AiR World, noted that a well-managed customer relationship is key to driving sales growth. Through personalized customer services enabled by GenAI, AiR World aims to transform the retail experience for both customers and businesses.

Indeed, predicting the trajectory of GenAI is increasingly daunting as the field continues to evolve and unfold. Nevertheless, Hong Kong’s unique blend of startup ecosystem, expertise, and business acumen positions it ideally to capitalize on the commercialization of GenAI, establishing itself as a hub for GenAI investment in the process.

“As the demand for LLMs continues to surge, investing in the middle layer is becoming a strategic imperative for those who want to stay ahead of the curve by making LLMs more accessible, user-friendly, and secure,” says Ernest Ma, HKSTP.

GenAI becomes increasingly integral to daily life, it presents a compelling opportunity for investment in local startup ecosystem. By accelerating innovation, GenAI can be a game-changer for attracting investment and talent from around the world, solidifying Hong Kong’s reputation as a hub for innovation.

As the catalyst for Hong Kong’s thriving GenAI ecosystem, HKSTP stands at the forefront of innovation, driving collaboration and growth while unlocking new investment opportunities. With a keen eye on the future, HKSTP is poised to propel the city’s GenAI community to a new height.