Hong Kong Science and Technology Parks Corporation (HKSTP) and Guangzhou Municipality have signed an agreement heralding closer cross-border scientific and technological co-operation.

The agreement underlines the growing economic importance of the Pearl River Delta (PRD) and the role Hong Kong plays in facilitating the exchange of ideas, capital, talent and technologies in the PRD.

"The purpose is to create a sustainable model that leverages the respective cities' strengths for long-term mutual benefit,'' said Victor Lo, chairman of HKSTP and chairman and chief executive officer of Gold Peak Industries (Holdings) Ltd.

Mr Lo said as more international and local tenants come to Hong Kong's Science Park, currently being developed at Pak Shek Kok between Shatin and Tai Po, many of them have a strong interest in entering the China market.

"Science Park does not have the space for large-scale production, and we see many opportunities for co-operation. Enterprises can develop products by virtue of HKSTP'S research and development (R & D), Hong Kong's well-established telecommunications infrastructure and sound legal and financial systems before mass production in Guangdong or in PRD."

Equally, Mr Lo said, Guangzhou companies could consider coming to Hong Kong to strengthen their international image and possibly to raise funds through the Hong Kong Stock Exchange. "Some pharmaceutical and biotechnology companies have approached us as they look to the global market, believing that Hong Kong is a window to the world."

The co-operation agreement had come at the right time, riding on the back of China's entry to the World Trade Organisation (WTO) which will "unleash tremendous opportunities for Hong Kong and overseas companies based in Hong Kong," Mr Lo said.

"China's WTO membership offers opportunities as well as challenges for Hong Kong industrialists with production bases in the PRD. They should explore ways to leverage the complementary relationships between Hong Kong and the PRD in order to compete with rivals on quality and innovative product features, instead of on price.

"It is clearly in Hong Kong's long-term interest to form strong ties in the areas of innovation, technology and economic development with one of the mainland's most dynamic and prosperous cities, Guangzhou, which is also the capital of China's economic powerhouse, Guangdong province."

He added that further economic integration between Hong Kong and the PRD would be driven by cross-border technological co-operation. "Hong Kong can play a catalyst role in commercialising R&D products which are either being developed in the PRD or at HKSTP. In other words, Hong Kong can still further enhance its role as the window for the Pearl River Delta by adding value to the products manufactured in China."