Sir Victor Blank, former British Business Ambassador and Chairman of CKGSB’s European Advisory Board, talks about the significance of British Prime Minister David Cameron’s three-day visit to China to boost UK-China trade relations.
British Prime Minister David Cameron sent a clear message during his three-day visit to China last week—UK means business. He brought with him the largest British trade delegation to accompany the head of state, comprising more than 120 people, including both FSTE100 executives as well as representatives from small and medium-sized companies. The delegates included CEOs and senior executives from companies like Jaguar-Land Rover, Airbus, GlaxoSmithKline and Royal Dutch Shell. Cameron traveled to three Chinese cities and met with many local business leaders, all in a hope to boost trade and investments with the second-largest economy in the world.
The trip was indeed fruitful: Cameron and Chinese Premier Li Keqiang signed 10 agreements in various fields and the trade deals were worth ￡6 billion in total. Sir Victor Blank, who has had a long and illustrious career in the banking industry and also served as former British Business Ambassador, accompanied the delegation. In this interview, Sir Victor, who also serves as Chairman of CKGSB’s European Advisory Board, talks about UK-China business ties, and the significance of this visit.
Q. Business appeared to be the dominant theme of Prime Minister David Cameron’s China visit. He brought more than 100 business leaders from the UK to China. What does it really say about the dynamics of UK and China’s relationship?
A. Firstly, I think there is a very important political dimension to the visit. The Prime Minister’s visit to the Chinese leadership and talks with them were clearly positive and productive. Without that positive political backdrop, it would be more difficult for the business session to be successful. But there is a clear intention of the British government to do two things: one is to make sure the British economy and the British business is open to China as well as to other countries, and people understand that Britain is open for business. The second is to find opportunities with this massively growing economy, in particular the growing consumer demand in China. The opportunity is the same for the British business to be able to export here, and to deliver some of its products here. The other aspect to the visit that was important was that the Prime Minister and the business delegation were being encouraged to look at joint ventures and to talk to Chinese counterparts about the possibility of working together.
Q. How is this visit being viewed in the British business community?
A. I think it’s being viewed as being very positive indeed. You may have appreciated that during the course of this government’s administration, there’s been quite an emphasis particularly about the foreign office to make sure that its activities encompass commercial activities and are not limited to diplomatic and political issues. There’s been a big built-up of the foreign office and the business department’s efforts to create an infrastructure around the world to support British business. So you have a thing called UKTI (UK Trade and Investment) which has been very active. When he was here, the Prime Minister announced the staffing for that is going to increase by a third. And you also got the China Britain Business Council, which is present in 14 or 15 cities throughout China, which has also been very active in promoting the interplay of business between China and Britain.
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Q. How important is China for the UK in terms of trade and business?
A. I think it’s important in two respects. Firstly, there has been a considerable increase in terms of Chinese foreign direct investment into the UK in the last couple of years. It is clearly hoped that Chinese business and Chinese financiers will participate in some of the major infrastructure projects in the United Kingdom. Secondly, there is now an appreciation that the opportunities for exporting into the Chinese market and working jointly with China offer great potential for British industry.
If you look at the complementarity, you got this tremendous manufacturing capacity in China. In the UK, which is still the sixth-largest manufacturing country in the world, the concentration has always been on financial services, which remains massive—London is till the capital center of the world. Somebody teased me the other day and said the only other thing that England is famous for is Downtown Abbey, the television program which doesn’t exactly give an image of Britain as we would like it. The fact is that we have terrific success in professional services, law, advertising and so on. Creative industry has been massive. Creativity, innovation, fashion…I can go through a very long list here. I think the British economy has been massively successful. It’s an open economy. It encourages entrepreneurship. It encourages innovation. It’s an easy place to do business. I think one of the objectives of the visit was to promote this and to make sure that people overseas, particularly in this country, understood that there are all those merits in the British economy, opportunities for Chinese business to do joint ventures with British business. We are not an old-fashioned country that simply makes old-fashioned television series.
Q. A big part of the delegation was of small and medium-sized enterprises (SMEs). In what kind of sectors do you foresee these SMEs collaborating with Chinese companies?
A. I don’t think there is any particular limitation on which industries will be capable of creating joint ventures. As I said before, there are some areas where I think we have particular expertise back in the UK, where there are more obvious opportunities, like creative industries and fashion and so on. People do forget that Britain is the second-largest aerospace manufacturing country in the world. The motorcar industry is actually very successful—70% or 80% of the Formula One engineering work is carried out in the UK. So, there is considerable skill creativity and expertise in manufacturing sectors as well as the creative industries.
Q. The last 18 months have been particularly good in terms of Chinese investment in the UK. How do you see that evolving in the future?
A. Well, it looks that the trend of increasing Chinese investments into the UK, particularly into infrastructure projects, is going to grow. The new fast rail line is something I think the British government hopes that the Chinese will participate in the financing of it. The UK is a safe economy. It’s a gateway into Europe. Something like 70% of companies from outside Europe headquartered in UK as their way into Europe rather than other countries. And the economy is terribly stable. So you see that in terms of people investing in real estate in London, they see it as a safe haven. You’ve got a country that is stable and that has great potential. We are now seeing growth returning quite significantly and predictably in the long-term into the UK economy. I would have thought that the Chinese investors would see this as a very interesting place to invest, whether it’s financing infrastructure projects, or actually jointventuring or buying companies in the UK. There are things to be bear in mind that UK is very open to overseas investments. There is almost no restriction whatsoever on the ability of countries outside, including China, to invest in companies or buy control of companies in the UK.
Q. The last couple of years, we’ve also seen some very iconic British brands being taken over by Chinese companies, such as Weetabix or the London Taxi Company. How are these takeovers viewed as in the UK?
A. I think broadly they are welcomed. Obviously there are still some backwoodsmen who are worried a bit about the British industry being taken over by people (from) overseas. But for many years now, we have accepted foreign direct investment into our industries. We put very little conditions on it, except for one or two sensitive industries—there are very few of them. The view that most people take, and I certainly subscribe to this, is that what we want is strong investment in businesses that employ people in the UK, that generate investments for the UK, and that generate profit within the UK. The ownership is not the most important thing. The most important thing is to generate strong businesses that employ people and employ them fruitfully.
Q. Do you see any challenges dropping up in the China-UK relationship?
A. I suppose there are always challenges of some sort. Occasionally, we have little political hiccups that come up. But broadly speaking, I think there is a great complementarity. I think the British economy and some of the businesses in the UK probably need additional promotion into China, because I’m not sure that from the Chinese perspective, the UK is necessarily seen as a strong economy as it is. It’s wonderful that the Prime Minister of the UK came herewith a delegation of 120 people. But you can’t just go home and forget about it. It just needs to be an ongoing effort. And the British government’s investment both in the Business Council and in UKTI demonstrate a very serious intent going forward. Will there be hiccups from time to time? Yeah, I’m sure there will be for one reason or another reason, political or economic. But broadly I think there is a direction of travel which is probably unstoppable and that is the opportunities both for Chinese business and British business to work together.