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June 9, 2000 VOL. 29 NO. 22 | SEARCH ASIAWEEK


Asiaweek Pictures
Seeing the future: Critics complain that Cyber-Port, depicted above by computer model, is just a glorified property development

Connect The Dots
Is Cyber-Port still indispensable to Hong Kong's high-tech future?
By PENNY CRISP and YULANDA CHUNG Hong Kong

It seemed like a good idea at the time. Take a prime piece of undeveloped Hong Kong property overlooking the sea and turn it into an ultra-modern, synergistic center for technology and computer firms: Cyber-Port. It would be the focal point for the Special Administrative Region's attempt to grow an entirely new industry. But something amazing happened between conception of this vision little more than a year ago and execution, which is still two years off: the envisioned industry arose on its own and is thriving without any help.

Large clots of Internet and e-commerce start-ups already have gathered in locales far less pristine and planned than Richard Li's $1.7-billion technology park-cum-residential estate development set for the west side of Hong Kong island. It turns out that the IT start-ups need much less in the way of paternalistic support from governments and more of such things as computer-friendly air-conditioning, fiber-optic wiring to provide fast Internet connections and reasonable lease terms. And they need these things fast. The verdict on Cyber-Port, at least from the community of Netrepreneurs who might have been the likeliest candidates for tenancy: too late and too yesterday in a business where one calendar month is the equivalent of one year in Web time.

Ironically (or was it just astute), Li's powerful tycoon father, Li Ka-shing, is landlord to perhaps the largest single brood of e-innovators. Originally, Li senior had planned to devote a few floors of his 80-story skyscraper, The Center, to a giant bookstore. A leisurely browse here, an idle few hours there. Instead, Li got high-speed browsers and driven, twenty-something IT workers whose only visible concessions to leisure are the khaki pants and Polo shirts they wear as they scurry about the office. Since the start of the year, The Center has become the nesting ground for about 40 technology companies that make up close to 70% of new tenants.

So Much for Planning

Sheung Wan
The Center: IT tenants fill more than 70% of Li Ka-shing's two-year-old, 80-story skycraper. Among the renters: Tom.com, iLink.net and Softbank Investment (HK)
The International Finance Center: Uninterrupted power supply, dual telephone trunk lines and backbone fiber-optic system have enticed tenants like Level 3 and AsiaOnline to the SAR's smartest intelligent building
Dotcom House: Renamed and retrofitted to be tech friendly, this once-shunned high- rise has used cheap, short-term leases to attract clients like renren.com

Wan Chai
The sales offices of Internet and telecommunications companies have replaced girly bars as the neighborhood's hottest destinations

Sai Kung
A more relaxed lifestyle and the Hong Kong University of Science and Technology are the main attractions for researchers and scientists who study, work and play many kilometers from the bustle and air pollution of downtown Hong Kong

Microseconds away (as the e-mail flies) is the International Finance Center, with an IT occupancy of 5% (that does not include a large number of banking and finance companies that work closely with the dotcoms). And just a couple of blocks away is Dotcom House, an aging, 22-story building that has been transformed into perhaps the hippest address for Internet-related firms. Clusters of technology companies are forming up and down Hong Kong island. In Wan Chai, an estimated 14 Internet service providers have set up shop. Continuing east along Hong Kong island are many other small- and medium-sized technology companies like Space Asia Media, which provides technology and marketing advice to publishers and advertisers -- one of about 10 similar ventures in a concentrated area. Further on is Boom.com, the online stock trader.

It is apparently unnecessary even to be physically close to the action. In rural Sai Kung in the New Territories, a growing assemblage of techies have built an enviable life. Combine a beautiful shoreline, the Hong Kong University of Science and Technology and a full-fledged information technology cell with research, development and recreational facilities: voilá, a vibrant tech hub. "There's a close-knit community of R&D and scientific people living [in Sai Kung]," says Philip Leung, CEO of Chinese Books Cyberstores. "They play tennis there, play golf there, go out to the beaches whenever they want."

Togetherness is not just a social thing when it comes to e-businesses all over Hong Kong. For example, Billy Tam, CEO of data center iLink.net, has unwittingly helped pull more than a few additional Internet tenants to The Center by servicing existing customers: "We're on the 56th floor and have direct fiber optic lines to the 19th, 45th, 53rd, 55the and 65th floors, where we have customers. It's easy for them to just come up for trouble-shooting or a minor upgrade." The Center has a raised floor of 360 mm, compared to 150 mm in regular offices, which is enough to conceal chunks of fiber-optic cable and allow for 20 years worth of wiring upgrades. Air-conditioning comes from under the floors, the best option for computer-strewn offices. Kelvin Lai is strategy director for Netalone.com, an application service provider and incubator, which occupies the 68th floor at The Center. "The Center comes close to what an intelligent building should be," he says.

Even in office towers not specifically designed to be smart, a critical mass of tech tenants sometimes enables them to negotiate for their special needs. Anthony Cheng, founder of a company called renren.com, says a group of start-ups at Dotcom House successfully bargained for a range of improvements: "We got the landlord to wire the building with cat-five [fiber-optic cable], put in lots of phone lines, 24-hour air-conditioning and a back-up power generator." Given that the highrise was empty from 1996 until the middle of last year in its earlier incarnation as the Financial Service Building, changing with the technology times seemed to pay off for the landlord as well. Rent is a low, low $1.40 per sq ft at Dotcom House (inclusive of utilities and management fees). Yet developer Nelson Chan says the most appealing part about his building for the tenants may be short-term leases. Rather than forcing a five-year lease on tenants as most commercial landlords do in Hong Kong, Dotcom House signs deals for as short as one year -- "In case the start-ups aren't around longer," adds Chan ruefully.

In the Central District can be found many bankers and venture capitalists. On the fringes, the techies gather. "The International Finance Center is Hong Kong's premier IT address," says Lane Leskela, research director for e-commerce intelligence services at Gartner Group (Asia Pacific). "It confers a certain status: You can afford the prestige to be located there. People take you seriously." The inevitable interaction of people and ideas is a bonus. Says Tam of iLink.net: "IT people love to get together and talk. You walk into the cafes and restaurants in the area and you see hordes of people exchanging ideas."

In other words, a few technical essentials, a good lease and a critical mass of dotcom energy probably mean much more to creating a good tech address than a sea view. Does Hong Kong still need Cyber-Port? The first phase of the project, eventually planned to be 1 million sq ft of office space for 30 anchor tenants and 100 start-ups, should be ready by 2002. The entire project is scheduled to come online by 2007. Says Penny Wong, general manager of YaShow.com, an entertainment portal at The Center: "For portal companies like us, we don't need Cyber-Port." Argues developer Chan of Dotcom House: "There really is no need for Cyber-Port. IT companies, established or not, come together before you know it." Ralph Stefanelli, telecommunications manager for Cyber-Port, concedes that the infrastructure of the project won't be revolutionary: "Everyone can spend the money and wire up their building."


Asiaweek Pictures
Computer model of Cyber-Port's residential buildings

Others believe Cyber-Port is a critical building block in Hong Kong's dream of becoming Asia's dotcom capital. It's impossible to say how important the original announcement of Cyber-Port 14 months ago was in terms of encouraging a tech industry -- the subsequent scent of money undoubtedly was key to fostering and sustaining interest among future Netrepreneurs -- but there is no question that Hong Kong has responded quickly. "I support Cyber-Port not because of its physical existence but because of what it means," says Cyberstores' Leung. "It has galvanized the whole community, raising people's awareness about technology." Agrees Leskela of the Gartner Group: "As an R&D center, Cyber-Port is a long-term incubator. Most important, it keeps Hong Kong on the map from a marketing point of view."

According to Cyber-Port's Stefanelli, technology advances will "allow you to use your mobile phone to turn on your air-conditioning while driving to work, so that your office will be cool when you get there. With our own wireless network, you can also carry your laptop around and connect to the Net without wires anywhere in Cyber-Port." Stefanelli adds that the development will differ from normal intelligent buildings because of shared facilities. "We'll have an IT street, a multimedia lab and a cyber library."

Cyber-Port shouldn't have a problem finding tenants, even if many prospects have already set up camp elsewhere and no longer seem to need such a facility. About 215 local and international companies have applied for space, and 15 tenants have signed letters of intent. Since the Cyber-Port land was granted free of charge by the government, rents will be heavily subsidized. Office leases will be as cheap as $1 to $1.50 per sq ft -- comparable to the revamped Dotcom House. Philip Leung of Cyberstores even hopes his romantic dreams of a collegial high-tech community pursuing soaring dotcom success will come true. "When I was munching lunch in Woodside, near Silicon Valley, Jim Clark [founder of Netscape] was sitting at the next table," Leung says. "I hope we'll be able to achieve that kind of talent convergence in Cyber-Port." Take heart, Philip, your dream may be nearer than you think.

Write to Asiaweek at mail@web.asiaweek.com

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