A 'knowledge city' under construction in Guangzhou, the capital of Guangdong, will be geared to helping the southern province transform itself from being the 'world's factory' of cheap goods into a centre of higher-value production. The 'Sino-Singapore Guangzhou Knowledge City' is a joint project of the provincial authorities and the government of Singapore. 'It will help Guangdong to establish a new economy with new industries,' said Tay Hun Kiat, chief executive of Sino-Singapore Guangzhou Knowledge City Investment and Development, the joint venture company managing the project. 'It will also hopefully be a showcase for Guangdong. That is our desire, to build a city for the future. If we succeed, it will be possible to replicate such a knowledge city in other cities in Guangdong and beyond. 'It is the policy of the Chinese government for Guangdong to have economic transformation to a higher value-add economy. It is natural to want to move up the value scale, and this city provides an opportunity to do that.' The joint venture was formed in September last year between Singbridge International Singapore and the Guangzhou Development District's Administration Committee. It plans an initial investment of 4 billion yuan (HK$4.9 billion) this year to establish the 123 square kilometre city. The groundbreaking ceremony, held in June 2010, was attended by Guangdong party chief Wang Yang and then Singapore senior minister Goh Chok Tong. Work began the following year, initially on the design, planning and construction of infrastructure such as roads. 'We aim to complete all the roads in the city by 2013,' Tay said. The company has begun marketing the project to international investors. To date, it has signed memoranda of understanding with global companies including Siemens, ABB, Philips, Hitachi, ST Engineering, Walt Disney and Procter & Gamble. 'We have secured the commitment of Ascendas [a Singaporean provider of business space solutions] to build a 30 hectare business park,' Tay said. 'We are working with 10 to 20 potential international investors, who may possibly invest in new energy, IT, telecommunications, creative industries and other projects in the knowledge city.' Danish design firm Index has signed an agreement to set up design facilities in the city. Huhu Studios, a New Zealand company that was responsible for the animation in the movie trilogy Lord of the Rings, has also signed a pact with a Guangdong firm, Guangzhou GET, to jointly invest in, develop and manage animation studios, an animation software research and development centre, and an animation training academy. 'The Guangzhou Knowledge City is a test bed for new ideas and technologies,' Tay said. 'If we succeed in some of these projects, a new value chain will be created. 'Once we have created a city to which international investors in modern manufacturing and advanced services are prepared to come, then we can create incentives for knowledge workers to come. They in turn will attract more knowledge workers from overseas and China.' He said the company expected to process the first batch of applicants for 3,000 jobs by 2014 and targeted a total of 35,000 jobs by 2018. 'We are looking at 4 million square metres of business park gross floor area being developed by 2018. For the 35,000 jobs, we will see a spread of people in research and development, intellectual property, operational corporate headquarters and high-end manufacturing and services.' The city aims to have 500,000 residents and 250,000 jobs by 2030, comprising local and foreign talent. Richard Wong Yue-chim, economics professor of the University of Hong Kong, said Guangzhou was ideally located to attract talent. 'Last year, the city attracted lots of talented people who migrated from the rest of China,' Wong said. 'That is a key to a high-value economy. You need talent.' Guangzhou and Hong Kong will complete a 180km/h rail link in 2014, which will reduce commuting time between the two cities to one hour. It now takes one hour and 45 minutes by train between Guangzhou and Hong Kong. The rail link will also connect with Guangzhou's Baiyun International Airport. 'A city needs to be good not only in infrastructure but also the software, shifting to higher value-added [developments],' Tay said. 'Products designed in the Guangzhou Knowledge City will add a lot more value than the labour-intensive manufacturing of the past.' In a decade or two, only 10 per cent of the current factories in Guangdong would remain, said Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries. 'In 10 to 20 years, Guangdong will no longer make cheap shoes, toys or clothes,' Lau said. 'These industries have to move away from Guangdong to labour-intensive countries such as Vietnam and Indonesia. Many countries' labour costs are much cheaper than China's. 'If the Singapore government helps Guangdong to build such industrial zones, it will benefit everybody. The Singapore government is doing the right thing.' But the key to whether the Guangzhou Knowledge City could succeed would depend on how much regulatory freedom it had, Wong said. 'It's not so much about know-how. You can build the hardware and attract people,' he said. 'The crucial issue is whether the city enjoys regulatory freedom. 'If not, it's going to be an uphill battle, even though it might attract a lot of knowledge industries.'