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BIZCHINA> Top Biz News
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UK shines for Chinese investors
By You Nuo, Fu Jing and Li Xing (China Daily)
Updated: 2009-04-01 08:07 World-class universities, financial services and the English language make the United Kingdom one of the most favored European destinations for Chinese investors despite the ongoing global financial crisis.
And, now is the golden time, as well, since the global economic downturn has led to a fall in real estate prices, salaries and to the depreciation of the pound sterling, Alec Jones, head of Emerging Markets Group at PricewaterhouseCoopers UK, told China Daily.
The "important Chinese players" now in the UK include telecommunication companies such as Huawei, ZTE and China Telecom, and other big names such as Alibaba, in addition to small individual businesses such as restaurants, Levi said in an exclusive interview to China Daily. Huawei has recently expanded its IT research and development in the UK. "The high value work, clearly, is attractive to us," he said, but it also shows that the UK "offers skills and the environment where that type of work can be successful". Chinese companies' presence in the UK has grown along with the rapid increase of bilateral trade over the past few years, said Levi, who heads the UK government team that brings in foreign investment. The volume of UK's exports to China in 2008 amounted to 4.5 billion pounds, an increase of 35 percent over 2007. Including services, the total amounted to 5 billion pounds. Meanwhile, China's exports to the UK grew by 22 percent year-on-year, reaching 20.7 billion pounds. "You can see a pattern here that UK's exports to China is growing faster than China's exports to the UK," he said. Cross-border investment between the two countries is also growing. Levi said the UK was the biggest European investor in China. Between April 1 last year and March 31 this year, the UK attracted some 59 investment projects from the Chinese mainland, well over the target of 30 set by the two countries' prime ministers last June. The two-way investment flow is likely to continue, but Jiang Fan, minister counselor at the Economic and Commercial Office, earlier told a group of Chinese business representatives in London that Chinese and British companies needs to communicate with each other more. She said British businesses are in urgent need of investment during the current financial crunch. Chinese companies need to study how they can grasp the opportunity to tap the technical, brand-building and skilled personnel potential in the UK through possible mergers and acquisitions. Alec Jones said that the UK clearly had its advantages in attracting overseas investors such as Chinese companies. It has a more open economy, posing fewer constraints for overseas investors than other European countries. The popularity of the English language, combined with its financial services, has also made the UK favorable, especially now that the value of the pound sterling was at its lowest in more than two decades. However, he also cautioned Chinese investors about the challenges they may have to face while trying to set up businesses in the UK. As a start, "they have to have a clear strategy as to what they want to get out of the acquisition," Jones said. It will be quite difficult to find good opportunities and narrow down the short list of potential targets, he said. The next challenge is how Chinese companies prepare to manage the UK companies. "Not many Chinese companies have significant operations overseas at the moment," he said. "One of the things that the Chinese companies will have to concentrate on in the next five to 10 years is building up enough management skills in organization to manage the companies they acquire." "There is also a need for Chinese companies to have at least some understanding of the business environment in the UK," such as local laws and customs, he said.
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