THE DUKE OF YORK VISITS CHINA
24TH TO 28TH OCTOBER
When The Duke of York relinquished his title as the UK Special Representative for International Trade and Investment in July 2011, it was agreed with FCO and UKTI that the trade-focussed programme already in planning for the remainder of 2011 would be completed.
So, His Royal Highness carried out this planned visit to China in support of UK trade, in October. The five day official programme included Shanghai, Guangzhou, Shenzen and Hong Kong.
There were various elements to the visit:
Build up relationships with Government officials.
The Government of Guangzhou.
The Government of Shenzen
The Financial Secretary in the Hong Kong Government (John Tsang)
Recognise and support Chinese inward investors to the UK.
SAIC Motor Corporation Ltd (Shanghai Automotive, who purchased the MG brand and the Longbridge Works, outside Birmingham in 2006; re-started manufacturing in July of 2011).
Huawei in Shenzen. A significant investor in the UK in our telecommunications networks, both landline and mobile.
Lunch for inward investors in Hong Kong.
Support for UK companies in their business relationships with key Chinese companies.
Rolls Royce engines and Hainan Airlines.
Rolls Royce engines and China Southern Airlines.
Understand High Value Opportunities (HVO) in Hong Kong.
The West Kowloon Cultural District.
The Kai Tak Airfield Redevelopment.
Fact finding/relationship development.
Visits to important Chinese companies:
Shanghai Media Group.Second biggest media group in China.
BYD (Build Your Dreams), which is the leading producer of batteries in the World, in Shenzen.
Vanke, a leading Chinese green property developer, in Shenzen.
Discussions with key business leaders:
Lunch with British business leaders in Shanghai.
Dinner in Guangzhou with UK and Chinese businesses.
Dinner in Shenzen with UK and Chinese businesses.
Discussions with the Chief Executive of HSBC, Hong Kong.
Recognise and support UK companies operating in China.
Savoir Beds.
The Designers Guild.
L.E.K.
Abacus Lighting.
NordAnglia. The British International School, Puxi.
Introduce UK companies to key Chinese officials and to important Chinese companies.
Delegations of UK companies accompanied for the following meetings:
The Vice Governor of Guangzhou.
The Vice Mayor of Shenzen.
BYD, in Shenzen.
Vanke in Shenzen.
Support for non-business areas:
Visit to the Yang Ali School in Guangzhou. NGO providing care for handicapped children, established by a British benefactor.
Briefing on vocational training in Hong Kong.The Chinese Cuisine Training Institute.
The meetings and visits painted a picture of an ever more confident China, growing at a rate of c 9.5%, which is seeking to reduce the impact of the recession in the USA and Europe by re-directing the economy to focus more on the opportunities in the domestic market.But this will take time and is by no means in place; a whole new sales structure will need to be established. In terms of the potential of the Chinese market, there are still barriers to expenditure. Not least because of the perceived failures in the education, social security and pension areas, for which the Chinese save a significant part of their incomes, so that they can fund them privately.
Food inflation ( <15%), and inflation in general (<6%), are key concerns, and the Government is seeking to reduce inflation, which is hugely damaging in a low wage economy.
In addition, it was identified that there is a shortage of skilled middle management to push businesses forward in the medium term. Overall, there is a need to move from “Made in China” to “Innovated in China”.
Chinese companies have not reached the stage at which they can move overseas and become multinationals. The skill sets and experience are not yet there despite their evident ambitions.
It was also apparent that UK companies still hold concerns regarding the Chinese market, particularly surrounding the complex legal system and an unreliable approach to intellectual property. In addition, China is no longer an economy producing cheap goods; in some sectors (such as aerospace) costs are potentially higher than in the USA and the UK. However all the UK companies met in China said, with one voice, that the opportunities in China are enormous, and that they would all operate in China out of choice. But new entries will need to fit the profile of what China now wants – basically high tech businesses – and must expect it to take time to build their business in China. Low cost manufacturing is becoming a thing of the past.
The importance of the new middle class should not be underestimated.Bigger than the ex pat market, and growing.They focus on western brands and conspicuous consumption. A great opportunity for top-end retail brands with a worldwide footprint.For example, Burberry has had stunning success in China, to date.
Inward investors were complimentary about the UK. The issues mentioned were the payroll costs in the UK, the skills and flexibility of the workforce, British design and creativity, and the excellence of our universities. In Hong Kong it was made clear that there may be considerable opportunities for our insurance market, and our legal system (and trusts in particular) in supporting the new millionaires in mainland China, who want certainty in the control and management of their new wealth.
