No area of China is richer than Guangdong's Pearl River Delta (PRD), especially the eastern part, stretching from Hong Kong in the south to the City of Guangzhou some 130 kilometres (81 miles) further north.

The catalyst for the spectacular growth which created this prosperity has been foreign investment, particularly from Hong Kong. At the end of 2000, total actual investment in Guangdong province was under HK$778 billion (US$100 billion), most of this committed to the PRD and to export-oriented manufacturing of toys, footwear and other consumer goods.

As a result, the region accounts for around 35 per cent of both China's imports and exports. Foreign-invested businesses are responsible for well over half of this share.

But while Guangdong and the PRD's factories have established themselves as the world's leading industrial manufacturing base, the area's services lag far behind. "Guangdong is dominated by industrial production. What it has a great need for is services - provided by Hong Kong," says Gilles Guiheux, a researcher specialising in Guangdong at the Hong Kong-based French Centre for Research on Contemporary China.

"There are great opportunities for Hong Kong [companies] to increase co-operation with south China. That's the beauty of south China, it's been developed by business and businessmen lead," says Charles de Trenck, shipping analyst at Salomon Smith Barney.

Where business in the PRD leads, companies from other locations follow. Mr de Trenck cites the example of Hong Kong's involvement in port development in the Pearl River by Hutchison Whampoa Ltd at Yantian in the east of the Shenzhen Special Economic Zone, and at Modern Terminals, jointly controlled by Wharf (Holdings) Ltd and China Merchants Holdings (International) Co Ltd, in the west of the zone.

But while Hong Kong's involvement in physical infrastructure in the mainland has a history dating back more than a decade, services are largely an unexplored market.

Service businesses will be allowed into China as a result of market-opening measures required by its entry into the World Trade Organisation. But they will not appear overnight, says Pansy Yau, assistant chief economist at the Trade Development Council.

"While most of the opportunities [in China] will be in service industries, Hong Kong is already strong in these areas," Ms Yau points out. "The next step is to integrate these services further to meet the needs of companies wanting to do business with the PRD and the needs of the economic development in the PRD region at large."

The transport and communications infrastructure for this is already being developed, with organisations in Hong Kong and Guangdong looking at ways in which they can co-operate rather than compete.

Moreover, Hong Kong is not just a jumping-off point for overseas companies wanting to do business in China. It is also the natural base for Chinese companies looking to establish themselves in international markets.

"Hong Kong remains a more effective place to do business, because of all its supporting services. It also has a freer and friendlier business environment, and you can meet more partners here," Ms Yau says.