HK firms climb industry ladder in GZ
By Liang Qiwen (HK Edition)

From pure trading of low-end manufacturing products, Guangzhou and Hong Kong have started working together to exchange in science, technology, culture and talented people in the past 10 years, said Xiao Zhenyu, director of Guangzhou Bureau of Trade and Economy.

The economic interaction between the two cities has experienced three phases, from 1979 to 1996, 1996 to 2004, and 2004 to the present days, Xiao told China Daily in an interview.

During the first phase, a large number of Hong Kong enterprises set up manufacturing plants in Guangzhou, producing or processing products of low technology content, such as garment, food, and drinks. This kind of manufacturing accounted for 95 percent of Hong Kong's investment in Guangzhou at that time.

During the second phase, manufacturing still took up a great part of Hong Kong-funded businesses.

However, there was co-operation in the field of science and technology. The manufacturing of food and garment was gradually replaced by higher technology-content products, such as chemicals, telecommunication facilities, and computer devices.

"At the same time, service industry and real estate industry developed by leaps and bounds," Xiao said.

Speaking about the increased investment by the companies in Hong Kong and Guangzhou in the third phase, he said: "After the Closer Economic Partnership Agreement (CEPA) was implemented in 2004, Hong Kong's investment in Guangzhou is much more technology-intensive. The more interesting trend is some Guangzhou local enterprises are squeezing into Hong Kong market."

In 2005, Guangzhou Pharmaceutical Holdings and Hong Kong-based Hutchison-Whampoa jointly set up Hutchison Whampoa Guangzhou Baiyunshan Medicine Factory. "It shows Hong Kong's top enterprise started looking at Chinese Medicine market. It's also a milestone that Chinese traditional medicine has found a channel to break into the overseas market with Hong Kong partner's help," he said.

(HK Edition 06/29/2007 page6)