Electronics manufacturing and parts and components, software and environmental protection are key areas in which Hong Kong and Shenzhen can co-operate to develop in the coming years, according to a new report. 'Shenzhen-Hong Kong Technology Industry Co-operation - the technology marketplace' was jointly compiled by economist Priscilla Lau Pui-king and the Trade Development Council following the signing of a memorandum of co-operation between the two cities last June. The report has found that Shenzhen and Hong Kong could co-operate on upgrading the industrial structure of the Pearl River Delta. 'Shenzhen's hi-tech industry is highly concentrated in certain sectors such as electronics and communications ... but due to this lack of diversity, the city's major products enjoy economics of scale but not economies of scope,' said Professor Lau, who is also a National People's Congress delegate. Shenzhen's electronics industry was reliant on imported integrated circuits and key parts and components, but Hong Kong could offer support in terms of parts and components design, application and other solutions. Hong Kong's established legal system, intellectual property protection and link to international markets was an invaluable asset to the development of hi-tech industries in Shenzhen, Professor Lau said. Hong Kong as an international arbitration centre was a leader in the region, having dealt with 281 cases in 2005, compared with 118 cases in London and 58 in Singapore. In 2005, the central government invested 10 billion yuan in developing Shenzhen's hi-tech industries, and the city's exports of US$1.8 billion that year was 40 per cent more than the year before.