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For years, Hong Kong has been a world renowned financial and logistics hub. But its neighboring cities are catching up fast.

"A lot of people say Hong Kong has many advantages as a finance hub and a logistics hub. Both are correct. But as you see, a city's long-term development does not solely rely on its present advantages. Will Hong Kong still have these advantages in 10 or 20 years," asked Cao Guoying (pictured), deputy director-general, department of educational, scientific and technological affairs, Liaison Office of The Central People's Government in Hong Kong.

Cao spoke about Hong Kong's potential in developing the cloud computing industry in a panel discussion, which followed the inauguration ceremony of the Hong Kong Cloud Standards Alliance held on April 12 at the Hong Kong Science and Technology Parks.

"Many cities in Inner Mongolia are discussing the business opportunities of cloud computing, because they have abundant land, low labor cost and rich energy resources. With that many advantages in Inner Mongolia, I then ask myself, 'What is Hong Kong's advantage?'

"To develop the cloud computing industry in Hong Kong, what should it focus on to create new advantages? I think Hong Kong has an advantage in data processing," said Cao. "The city has very high service standards, a good legal system and the society is mature -- these build a very good foundation for Hong Kong to develop its data processing industry."

He urged Hong Kong to create added-value in the data processing industry in order to secure its position as the regional data processing center, and "this may become the next-generation advantage in Hong Kong."

Aiming to participate in selected China cloud computing projects, the Hong Kong Cloud Standards Alliance was urged to leverage Hong Kong's mature legal framework to provide trust for both local and greater China cloud users.

"China is paying 'great attention' to the development of the cloud computing industry," said Chen Wei, director of software service department, Ministry of Industry and Information Technology of the People’s Republic of China.

In October 2010, the State Council in China published a policy paper titled "Decision of the State Council on Accelerating the Fostering and Development of Strategic Emerging Industries (國務院關於加快培育和發展戰略性新興産業的決定)," which placed cloud computing as one of the core focus areas for new industries development.

MIIT's Chen says the software service department has completed the following tasks: 1) Created cloud computing pilot test beds and showcases in five cities: Beijing, Shanghai, Shenzhen, Wuxi  and Hangzhou; 2) Sped up cloud computing research and development in support network, business models, virtualization technologies, big data management technologies, crucial cloud computing technologies and certain key products.

China is facing two challenges in its development of the cloud computing industry, according to Zhao Xiaofan, chairman of China Software Industry Association.

Zhao said: "The first challenge concerns law. In China, the progress of law [reform] is slow compared to that in Hong Kong. China laws concerning personal data protection and antitrust needs [further] development.

"As for standards, the newly drafted 'Personal Data Protection Guidelines for Public and Commercial Service Information Systems' is after all a standard only -- it is not law yet. To a certain degree this creates difficulties and obstacles when implementing cloud computing in China, as some users are puzzled by issues like personal data safety and security. [With the newly set up Hong Kong Cloud Standards Alliance,] I hope that Hong Kong and Guangzhou can conduct pilot tests in this area," he added.

"The second challenge concerns trust, this is particularly so in a corporate environment. Obviously law has a much higher status than trust, but when you talk about business ethics and regulations, trust is a key element in business activities. We all know that our economy is developing speedily, but the business credibility in Mainland China seems to be showing a downward tendency," said Zhao.

According to Chen, the next step for MIIT's software service department is to strengthen the standardization of important practices such as SOA (service oriented architecture), and to drive the adoption of international standards like ISO/IEC JTC1/SC 38 and SOA.