Interviewee: Sunny Cheung

• Chief Executive Officer of Octopus Holdings Limited
• Mr. Cheung has more than 40 years of experiences in retail banking and payment business. Before joining Octopus in 2011, he served as the general manager of Visa International in the region of Hong Kong and Macao.

Interviewer: Dr. Mark Lee, Research Director of Asia Pacific Institute for Strategy

Date: June, 2019

Mark Sir :  As the first electronic payment system in production in the world, Octopus Card is the pride of Hong Kong. Is it actually a joint venture of eight companies?

SUNNY : Octopus is not a joint venture of eight companies. As early as 1979, the then mass transit railway corporation limited (now known as MTR Corporation) had adopted a fully automatic fare collection system.

In order to further provide convenience for passengers, MTR Corporation generated a development strategy for the new generation of fare collection system in 1993, and determined that the non-contact smart card technology is the most suitable for the application of fare collection system platform.

By 1997, Octopus Fare System was officially launched, which took the first step towards making life easier in Hong Kong.

In addition to improving the ticket charging mode, the system also allows passengers to pay the exact amount on various public transport vehicles with only one card in hand, which eliminates the inconvenience of using fractional currency. Public transport companies can also put their efforts and resources into service quality and efficiency.

Mark Sir : What is "Octopus" named after?

SUNNY : The name of "Octopus" was the champion works selected by Jack So JP, chairman of the MTR Corporation at that time, in the "1996 Name Competition".

"八達” in the Chinese Name of the Company is derived from the Chinese idiom "四通八達", which means "extending in all directions", indicating that people can go everywhere just with one card in hand. Its English name "Octopus" means "八爪魚” in Chinese, which works in concert with "八（eight)" in its Chinese name. The tentacles of octopuses can grasp a lot of things and reach out toward anything around at the same time, representing the extensive application of Octopus.

Mark Sir : It was a great breakthrough and development to make customers as the starting point of the Company at an early stage.

SUNNY :The brand concept of Octopus is to strive to offer better convenient services to make life easier.

Octopus was originally a simple fare collection system for public transportation. Life in Hong Kong is fast-paced and it has a huge traffic flow. Blocking traffic because of ticketing problems is absolutely not allowed to occur.

Octopus uses the FeliCa non-contact smart card technology of Sony, a Japanese company, to replace cash payment after several generations of development and improvement.

Advantages: Electronic fare collection helps reducing manpower and improving accuracy comparing to traditional fare collection by which it is difficult to estimate the quantity and quality of coins, thereby often it cause losses to the Company. The operation mode of manual counting also encounters difficulties and pressures.

Mark Sir : What are the challenges faced by innovation in Hong Kong?

SUNNY : In fact, it depends on which mode Hong Kong adopts: The mode “Developing goes first before supervision” makes innovation run faster. If any problems are found during the process of development, solve them one by one. However this process will pay price: For example, there is high risk; counterfeit incident may exist, and so on.

If adopting the mode “Supervision goes first before development”, we need to strive to make the project perfect and well designed. The downside is that the evolution will be slow and too many concerns will hinder the development and innovation.

Mark Sir: Does Hong Kong adopt the mode of "Supervision goes first before development"?

SUNNY : Hong Kong attaches great importance to personal protection and takes consumer rights as the top priority. Our company identifies with the importance of supervision and makes much account of the rights and privacy of our customers.

Some countries adopt the mode of "Development goes first before supervision". Using this mode, many projects can develop very fast and the pace of popularization can be pushed forward. However, this mode may cause many problems. Therefore the balance between the two shall be achieved.

Mark Sir : Didn't Alibaba-Yu'E Bao start out as a bank?

SUNNY : As I said, Hong Kong takes consumer rights as the first priority and attaches great importance to personal protection. Some countries adopt the mode of "Development goes first before supervision" in which many projects have developed rapidly and the pace of popularization is pushed forward. Actually, both modes have their own advantages and disadvantages. Different places need to adopt their own development modes according to their own needs.

Mark Sir: We should pay attention to social culture, system, business mode, etc. instead of just considering science and technology. Am I right?

SUNNY : Yes, you are right. All the social, political and cultural factors will affect the development of modern science and technology. Therefore, enterprises must have high flexibility and innovative thinking in a changeable environment, seize opportunities and keenly grasp the development trend of science and technology innovation in the world.

Mark Sir : Does Octopus have overseas business?

SUNNY : Mainland China business: Opening up the huge business opportunities in the mainland market has always been an important direction for the business development of Octopus Cards Limited. With the further integration of the economies of Mainland China and Hong Kong, Octopus Cards Limited has shared its successful experience and knowledge with the Mainland, and enhanced its non-contact payment service for travelers shuttling back and forth between the Mainland and Hongkong.

International Business: As a full-service smart card issuer and operator, Octopus Cards Limited has its unique advantages. By extending its expertise and experience to all parts of the world, it makes life easier for people everywhere around the world.

At present, Octopus Cards Limited has successfully introduced its technology and expertise into the Netherlands to provide a central clearing system for the Automatic Traffic Charging System of this country. In addition, the Company also has developed and implemented the core logistics system for Dubai Road and Transport Bureau, which employs non-contact smart card payment system.

Mark Sir : Has Octopus collaborated with other organizations to create new initiatives for the convenience of the public in the near future?

SUNNY : Octopus assisted the government in smoothly launching the "Public Transportation Subsidy Program". Citizens can receive their monthly public transport subsidy using their Octopus cards. The process is simple and convenient.

In addition, we are working with Hong Kong's Taxi Council to promote the "Taking e-Taxi using Octopus Card", which has historically changed the way Hong Kong citizens pay taxi fares, thus advancing Hong Kong to be developed into a smart city.

In March this year, the Company launched the world's first virtual platinum prepaid card, O! EPay MasterCard, to provide a smooth online shopping experience for all O! EPay users! In addition, we cooperate with Samsung Electronics Hong Kong to launch the first mobile payment wallet which supports Octopus card by adding Smart Octopus into Samsung Pay.

Mark Sir : Are there any new technological developments in society in the near future?

SUNNY :In recent years, QR code has developed rapidly. In addition, the "face" recognition technology provides high accuracy, by which people only need to appear in front of the lens! Like in the old days, prominent people did not need to pay or sign for their meals, just being identified by their appearance.

Mark Sir : How does innovation change an industry?

SUNNY :As mentioned in "The Road Ahead by Microsoft Bill Gates" many years ago that, with Internet Banking, there is no value for the existence of real banks. "Banking is necessary, banks are not". To some extent, it may be right. In the past, banks only worked to provide cashier transactions, but now the role of banks is different, they provide many other service items.

With the rapid development of the market and under the fierce competition, enterprises need to have innovative thinking, keep pace with the times, and formulate clear development goals and directions to cater for the needs of the market and the public. Enterprise innovation can maintain social competitiveness and effectively promote the efficiency of enterprise management, which is an indispensable part of enterprise development.

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