UK attracting more Chinese investments

As China emerges as a top destination for foreign direct investment, the United Kingdom is waving, invitingly, its hand at companies from the Middle Kingdom.

"The United Kingdom is the second-largest outward investor in the world, and is the gateway to the world's biggest single market -- Europe," said William Pedder, chief executive of UK Trade & Investment (UKTI)'s inward investment group.

"That is (what) ... you need when you want to find a place in Europe, because we have a long tradition of doing business with all other European nations," Pedder said.

"We expect to see more Chinese companies as they understand the potential of selling direct into Europe."

Pedder made the remarks last week, during the UK-China ICT (information and communication technologies) Week in Beijing.

He would not say if the British Government plans to implement new policies aimed at attracting Chinese investments.

"We intend to keep the existing ones to retain our position as the leading destination for inward investment into Europe."

Pedder's visit came as Chinese firms are increasing their overseas investments.

Overseas investments from the Chinese mainland, excluding financial services, reached US$33.2 billion by the end of last year, indicates a report published last Wednesday by the Ministry of Commerce (MOFCOM) and the National Bureau of Statistics (NBS).

Last year, Chinese mainland companies directly invested US$2.85 billion overseas, up 5.5 per cent year-on-year.

The MOFCOM-NBS report marked the first time China made public a statistical report on Chinese firms' direct investments overseas, excluding financial services.

"Every country, regardless if it is developed or developing, requires foreign capital to boost its own economy. The United Kingdom is no exception," said Xing Houyuan, a senior researcher with the Chinese Academy of Trade and Economic Co-operation.

The academy is a think-tank affiliated with MOFCOM. Xing helped draft the report.

"No one will ignore the opportunities brought by China as a growing number of Chinese companies consider 'going global' as a strategic need for growth, and as the Chinese Government simplifies approval procedures for investing overseas and relaxes control of capital outflow," Xing said.

More than half of Chinese mainland firms' direct investments overseas last year were in Asia, indicated the report.

More than 90 per cent of those firms' direct overseas investments last year were within the mining, manufacturing, trading and services sectors, the report said.

"Usually high-tech companies, with self-developed intellectual property, establish their presences in Europe," Xing said.

"China's manufacturing industry still focuses on the lower part of the industrial chain, and it lacks core technologies. Given the relatively higher costs of labour in Europe, direct investments in the manufacturing sector usually flow into less industrialized countries."

Pedder is confident more Chinese firms will invest in the United Kingdom.

"At the moment, Chinese investments (in the United Kingdom) are smaller than we would like. But the prospects are enormous," Pedder said.

"What is interesting about investments from China is their rate of growth. At the moment, they are fairly small operations, but they grow fast, in number and in size, once they are established in our country."

Pedder expects Chinese companies will "increasingly look at developing their own technologies and their own research."

"This needs to be done internationally. And the openness of the UK's research establishments and universities means the United Kingdom is an excellent country for collaboration on research," Pedder said.

More than 170 Chinese mainland companies are operating in the United Kingdom. Many of those firms belong to ICT-related sectors.

The figure was 50 three years ago, Pedder said.

The UKTI Inward Investment Group has 11 full-time employees in Beijing, Shanghai, Chongqing and Guangzhou.

"We are putting more staff into China to help Chinese companies, one on one, set up operations in the United Kingdom," said Paul Grey, the group's Asia-Pacific director.

Source: China Business Weekly