Hong Kong will have to review its role as the middleman for firms doing business with the mainland as a result of China's expected membership of the WTO, according to the local business community. While the agreement between US and mainland trade officials was seen as positive news for Hong Kong in the short term, economists and business groups warned that Hong Kong would have to become more competitive if it were to retain its role as the premier financial and trade gateway to China. Professor Leonard Cheng Kwok-hon, head of economics at the Hong Kong University of Science and Technology, said the pact should spur businesses to make the best of new opportunities. Professor Cheng said in the short term the SAR would benefit from an influx of capital and foreign investment in the mainland, providing expertise in financial services. However, some sectors, particularly financial services, could be exposed by US and European firms in the longer term if they did not become more competitive. 'Hong Kong has to reinvent itself and become more competitive and able to handle the deals,' said Professor Cheng. 'We have to ask, 'are we good enough? Are we as good as American or European investors?' ' Shamus Mok Chung-yuk, chief economist at the Bank of East Asia, said the agreement would help Hong Kong's economic recovery, boosting business and consumer confidence. But Mr Mok warned the SAR would gradually see its pre-eminence as the gateway to mainland trade diminish and would have to change if it were to remain an attractive place to do business. 'We have to be an investor and a player, just like any other country. We have to get deeper into the market,' he said. Victor Fung Kwok-king, chairman of the Trade Development Council, hailed the Sino-US agreement as 'extremely good news for Hong Kong', adding it would have a favourable impact both in the short and long term. Smaller multinationals would be encouraged to do business on the mainland and would need the support services offered by SAR firms. 'The [mainland] market pie is going to expand so much that our share may even decrease, but the actual benefits will be larger.' Mr Fung said service industries would benefit the most from the opening up of trade, while manufacturing firms would benefit from a more certain regulatory environment. 'We will no longer be subject to, shall we say, capricious trade actions.' Fred Hu Zu-liu, head of greater China research at Goldman Sachs, agreed that even as Hong Kong's dominance was challenged by Shanghai and other mainland ports, it would gain from offering higher value-added services and goods as the economy diversified into new industries such as information technology. Jason Felton, chairman of the American Chamber of Commerce in Hong Kong, said the deal would benefit both sides, including the SAR, but warned Hong Kong could suffer as investors capitalised on lower costs on the mainland.