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2011 South East Asian Regional Workshopon Science, Technology and Innovation Indicators

(5 – 8 December 2011)

Measuring R&D in Hong Kong, China

Joseph Y.C. WONGCensus and Statistics Department, Hong Kong, China

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Topics covered in this brief

Background

Data collection of R&D statistics for the business, higher education and government sectors

Analysis of R&D activities in Hong Kong

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Development of STI Indicators in Hong Kong In Hong Kong, the Census and Statistics Department (C&SD) is responsible

for compilation and dissemination of STI statistics

R&D statistics for the business, higher education and government sectors introduced since 1998 R&D statistics for the business and government sectors are survey-based R&D statistics for the higher education sector are based on administrative data

Innovation statistics produced as from 2001with the implementation of the innovation survey

Other STI indicators include: Human resources in science and technology Research output in the higher education sector Patents External technology flow

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C&D adopts international statistical guidelines for compilation of internationally comparable STI Indicators of Hong Kong

R&D statistics: Frascati Manual (OECD) Innovation statistics: Oslo Manual (OECD and Eurostat) Other STI indicators: concepts and definitions promulgated by

OECD

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Development of the data feeding system of R&D statistics for business sector

1998 to 2000: basic R&D statistics based on supplementary data collected through the annual survey of economic activities (mainly designed as the data feeding system for industry statistics)

As from 2001: comprehensive R&D statistics compiled from data collected through the dedicated Survey of Innovation Activities, which also collects innovation data from business firms

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Coverage of the Survey of Innovation Activities

Frequency: annual survey conducted under the Census and Statistics Ordinance as a mandatory survey

Coverage: an economy-wide survey covering all major industries in Hong Kong, except agriculture, forestry, fishing, mining and quarrying industries (insignificant, accounting for 0.06% of GDP)

Sampling frame: Central Register of Establishments (CRE), an computerised database containing records of all companies and organisations operating in Hong Kong; private non-profit organisations are not separately identified in the CRE

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Sampling design of the Survey

Industry classification: Hong Kong Standard Industrial Classification (HSIC) Version 2.0, modeled on the UN’s International Standard Industrial Classification of All Economic Activities Revision 4,with local adaptations

Population size: around 300 000 business firms in Hong Kong

Sample size: around 5 500 business firms in each survey round

Sampling method: stratified sampling; business firms are stratified by industry group, and within each industry group, further by firm size (in terms of employment) – construction firms with less than 10 employees are not covered

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Data collection method

Data collection method: mainly personal interviews (including face-to-face interviews and telephone interviews)

A typical survey cycle of the Survey (2010 reference year as an illustration) is as follows: Review of changes in data requirements and finalisation of

questionnaire: November to December 2010 Preparation and printing of survey documents: January 2011 Training of interviewers: February 2011 Fieldwork period: February to September 2011 Response rate: over 95% Data quality assurance measures: computer validation and field

verification of dubious cases throughout the data collection process Data tabulation and analysis: October to November 2011 Dissemination of survey results: end December 2011

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Concepts and definitions of R&D adopted in the Survey In the Survey, R&D activities are defined as “creative work

undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this knowledge to devise new products / services / applications and improve existing products / services / applications”

R&D activities include: Basic research and applied research in natural sciences, engineering and

technology, medical sciences, social sciences and humanities (the latter two research areas are rare in the business sector)

Experimental development work leading to new products / services / processes

Challenge: what is R&D and what is not R&D may not be clear to some respondents; overcome by including practical examples in explanatory notes accompanying the questionnaire e.g. development of a new drug is treated as R&D whereas clinical trials of a new drug approved overseas for using locally is non-R&D

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Major R&D data collected in the Survey

R&D personnel: direct employees engaged directly in R&D activities, with the following breakdowns: By occupation – researchers / scientists / engineers, technicians and

other supporting staff (usually staff of R&D department or R&D project team providing direct support to R&D activities such as R&D managers, administrators and clerical staff)

By level of educational attainment - university degrees at Ph.D. level, university degrees below Ph.D. level, other post-secondary diplomas / certificates and level lower than post-secondary diplomas / certificates

By gender

R&D personnel are measured in terms of: Head count Full-time equivalent, calculated as total man-months (unit of

measurement in the Survey) of R&D personnel divided by 12

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Major R&D data collected in the Survey (cont’d)

R&D expenditure: expenditure on in-house R&D performed by business firms, with the following breakdowns: Use of R&D - R&D for own use of the R&D performer and R&D

performed for other organisations Type of expenditure – current (e.g. cost of labour, materials and

supplies) and capital (e.g. plants and equipment) expenditure on R&D as well as payment for royalties and license fees

Nature of research – basic research, applied research and experimental development

Research area – natural sciences, engineering and technology, medical sciences, social sciences and humanities

Source of funds – business enterprises, government and abroad

Expenditure on R&D contracted out to other parties, with the following breakdowns: Contracted out to local parties in Hong Kong Contracted out to parties in the Mainland of China Contracted out to other parties outside Hong Kong

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Major R&D data collected in the Survey (cont’d)

Collaboration arrangement on R&D with other parties, with the following breakdowns: Local parties and parties outside Hong Kong (cross-boundary

collaboration on R&D with parties in the Pearl River Delta Economic Zone in the Mainland China, other places in Mainland China and other countries/territories)

Nature of partners – public research institutes, higher education institutions, affiliated business firms, non-affiliated business firms etc.

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Data collection of R&D statistics of higher education sector

In Hong Kong, Government is a major source of funding for higher education institutions, including the financing of R&D projects performed by universities

Statistics of R&D activities in the higher education sector are based on administrative data provided by the University Grants Committee (UCG), the Government funding agency for higher education institutions

R&D data cover all the seven universities in Hong Kong

Basic R&D statistics include R&D personnel (in terms of both head count and full-time equivalent) and expenditure on R&D (including natural sciences, engineering, social sciences and humanities) performed by universities in Hong Kong

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Data collection of R&D statistics of government sector

In Hong Kong, public research institutes perform high-quality R&D to facilitate technology transfer to industry for commercialisation: Hong Kong Applied Science and Technology Research Institute

(established in 2000) Automotive Parts and Accessory Systems R&D Centre Hong Kong R&D Centre for Information and Communication

Technologies Hong Kong Research Institute of Textiles and Apparel Hong Kong R&D Centre for Logistics and Supply Chain Management

Enabling Technologies Nano and Advanced Materials Institute Hong Kong Jockey Club Institute of Chinese Medicine Hong Kong Productivity Council

For the government sector, data on R&D personnel and expenditure are collated through annual statistical returns from individual public research institutes and government departments

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Dissemination ofR&D statistics and STI indicators of Hong Kong

R&D and innovation statistics of Hong Kong are published in the annual publication Hong Kong Innovation Activities Statistics Hong Kong Innovation Activities Statistics 2009 was published in end December

2010 The 2010 edition will be published in end December 2011

More comprehensive analyses of science and technology statistics and other knowledge-economy statistical indicators are published in the biennial publication Hong Kong as a Knowledge-based Economy The 2011 edition was published in September 2011

Feature articles on R&D, innovation activities and KBE published in Monthly Digest of Statistics

All C&SD publications and their back issues can be free downloaded from C&SD website: http://www.censtatd.gov.hk/home/index.jsp

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887

5 048

0

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

For the business sector, R&D has been intensifying over the years with increasing number of business firms being R&D performers

Number of business firms having undertaken R&D

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R&D personnel (full-time equivalent)

Business firms’ intake of R&D personnel has been on the rise during 2000 to 2007, and the number has consolidated in recent years

Higher education institutions have the largest intake of R&D personnel Public research institutes mainly play a supporting role and employ a

smaller number of R&D personnel

23 300

9 00011 000

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R&D personnel comprise mainly researchers (83%), technicians (11%) and other supporting staff (6%)

Researchers (83%)

Technicians (11%)

Other supporting staff (6%)

Researchers (72%)

Technicians (18%)

Other supporting staff (10%)

Business sectorAll sectors

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01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Total R&D personnel in the business sector R&D personnel at PhD level

R&D personnel (full-time equivalent)

In the business sector, the number of R&D personnel at Ph.D level is gradually picking up (the proportion of R&D personnel with PhD degree increased from 5.5% in 2001 to 9% in 2009

10 500

3 300

20

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Business sector Higher education sector Government sector

GERD US$ Mn

Business firms’ expenditure on in-house R&D consolidated in recent years after a period of rapid growth

Expenditure on R&D in the higher education and government sectors continue to increase

Gross domestic expenditure on R&D (GERD) increased from US$ 0.7 Bn in 1998 to US$ 1.7 Bn in 2009, with an average annual growth rate of 8%

US$ 1.7 Bn

US$ 0.7 Bn

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In the business sector, large firms taken together account for 40% of the total R&D expenditure, followed by medium-sized firms (35%) and small-sized firms (25%)

Large firms (40%)

Medium-sized

firms (35%)

Small-sized

firms (25%)

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0.4

0.8 0.8

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,400

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Total R&D expenditure (US$ Mn) (LHS) R&D expenditure as % of GDP (RHS)

GERD US$ Mn

Ratio of gross domestic expenditure on R&D to GDP is relatively small, as Hong Kong is a service-oriented economy with a small manufacturing base (value added of manufacturing industry account for 1.8% of GDP)

GERD as percent of GDP (%)

23

706

267

38

377

0

100

200

300

400

500

600

700

800

900

2001 2002 2003 2004 2005 2006 2007 2008 2009

Domestic expenditure on R&D in business sector (US$ Mn) Expenditure on R&D outsourced to parties outside HK (US$ Mn)

US$ Mn

Business firms have been increasingly outsourcing R&D to parties outside Hong Kong, in particular the Mainland of China amid the growing economic integration between the two places

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0

200

400

600

800

1,000

1,200

2001 2002 2003 2004 2005 2006 2007 2008 2009

Business expenditure on R&D outsourced to parties outside Hong KongBusiness domestic expenditure on R&D

Business total investment expenditure on R&D US$ Mn

For the business sector, the amount of domestic expenditure on R&D (US$ 0.7 Bn) and R&D outsourced to parties outside Hong Kong (US$ 0.4 Bn) taken together, stood at US$ 1.1 Bn in 2009

In 2009, over 490 local firms collaborated with parties outside Hong Kong (mainly Mainland China) in R&D projects

US$ 1.1 Bn

US$ 0.3 Bn

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Other STI indicators

Human resources in science and technology (defined according to OECD guidelines) Stock: Population aged >15 with post-secondary education or working

as professional/associate professionals (based on the data from Population Census/By-Census)

In 2006, there were 27% of the population aged 15 and over in Hong Kong with post-secondary education or working as professional / associate professionals, significantly higher than the corresponding figure of 19% in 1996.

Flow: Student enrolment in post-secondary education (based on the administrative statistics on student enrolment of post-secondary education obtainable from the Education Bureau)

The no. increased considerably from some 157 000 persons in 2000/01 to around 301 200 persons in 2010/11.

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Other STI indicators (cont’d)

Research output in the higher education sector Number of scientific articles, publications, patents, assignments, prizes

and awards relating to R&D (based on the statistical records of UGC which cover 8 UGC-funded higher education institutions in Hong Kong)

No. of research output items was over 21 000 each year

Patent statistics Including statistics on patent applications and patents granted in Hong

Kong and relevant statistics for Hong Kong residents in other economies (based on administrative records from Intellectual Property Department and other statistical records from patent offices of other countries

No. of patients granted in Hong Kong doubled, from around 3 000 in 2000 to around 6 000 in 2010

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Other STI indicators (cont’d)

External technology flow

External trade in high technology products (e.g. telecommunications equipment, data processing machines, scientific instruments etc.), based on merchandise trade statistics compiled from data recorded in import/export declarations

The share of high-tech products in Hong Kong’s total merchandise exports increased from 23% in 2000 to 45% in 2010

Technology balance of payments (TBP) - measures receipts and payments for the use of patents, licenses, know-how, trademarks, design, patterns, technical services, and for the financing of R&D activities carried out abroad (based on data collected through the Annual Survey of Imports and Exports of Services)

In 2009, payments for international technology amounted to US$ 1.1 Bn, compared with the receipts of US$ 0.3 Bn, reflecting Hong Kong’s businesses utilising international technology for technology upgrading and enhancing their competitiveness

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Thank you