Business | UK-China Relationship and its implications for trade and investment in 2021

In a recent UK-China Business Updates event held by Crayfish.io to celebrate the Chinese New Year, Tony Clemson, Deputy Director Innovation & Industry at DIT China discussed the future of UK-China relations and international trade implications for this coming year.  Here is a write up of his talk by Avery Winningham.

For a long time now, China has provided many diverse opportunities to UK investors.  However, it is important to be aware of the many risks as well.  

The British Government has worked to uphold the strong foundations required for a successful bilateral relationship between the UK and China.  However, with any relationship, whether it be government to government, business to business, or person to person, there are indeed some disagreements.  Nonetheless, as the UK and China have a mature and strong relationship, the two nations have worked to compartmentalise and ‘agree to disagree’ where there is a difference of opinion, while continuing to deepen collaboration in areas of mutual interest.  This has set the standard for all businesses to follow.

With regard to trade and investment, the British Government wants to protect British values and national security, however where there are areas for cooperation that does not impinge on this, the Government is supportive.  

The UK’s trade relationship with China is very strong and indeed growing stronger.  Last year, the UK exceeded its previous record for bilateral trade and investment (>£100 billion), and is continuing to grow.  As the UK’s third largest export partner (after the US and Europe), and with the UK the number one country in Europe for attracting Chinese FDI, Chinese investment is welcomed and supported in the UK, where there are no national security implications.

 

Post-Pandemic China

Following the Coronavirus pandemic, China has experienced positive recovery, and was the only major economy to show GDP growth in 2020 (around 2%).  Open now for domestic business and travel, China has evidently become a much greater part of UK businesses due to its economic success this year, and therefore many businesses remain committed over the year to come. 

As the second largest digital economy in the world, with nearly one billion netizens and ⅖ of the world’s tech unicorns, China is pioneering many technologies, particularly EdTech and MedTech as a result of the pandemic.

 

Risks for doing business in China

Any business that intends to work in China with data needs to get good legal advice to best understand cyber security law.  This issue of how to navigate China’s cybersecurity law is year-on-year the top concern for UK businesses in China. An understanding of export controls from the UK and intellectual property is essential.  Furthermore, the issue of reputation is often faced by businesses when entering most other markets, but there are many attributes unique to China. 

 

Advice for business development in light of the pandemic 

In light of the pandemic, investment in an on-the-ground Chinese team will be beneficial.  Having on-site experts who are skilled in navigating this diverse and complex market will help reduce challenges for foreign companies. However, many businesses have adapted and moved online, so it is still possible to keep in touch and have video and audio calls with Chinese partners as an alternative option.  Nonetheless, maintenance of key partners and support in China who can provide both a good understanding of the market and essential services is still greatly important.  Finally, dedication, time, and commitment will all allow for great success in the long run.

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