UK clamours for Chinese firms in ICT
By Zhu Boru (China Business Weekly)
Updated: 2004-06-02 09:10

The British Government expects more Chinese companies, especially those in information and communication technologies (ICT), to invest in the United Kingdom when they start "going global."

"The UK has been very strong in ICT sectors, and there can be enormous opportunities of co-operation between British and Chinese high-tech companies," said Sir Christopher Hum, British Ambassador to China, on the sidelines of the recent China Beijing International High-tech Expo. "We are willing to have more Chinese companies come and invest in the UK."

The ICT sectors Hum referred to include telecoms, Internet technology, and hardware and software development.

The British companies are able to offer valuable experience and technologies to their Chinese partners, while the latter can bring job opportunities and fresh ideas to the UK market, said Hum.

"The UK has been an origin point of scientific discoveries and creations that are able to change the world," said Hum.

The structure of DNA was first discovered there, and the world's first computer was made in the UK.

"And it remains in a leading position in new technologies such as 3G (third-generation mobile communications), digital television and next-generation displays," Hum added. More than 170 Chinese mainland companies are operating in the UK, many of which belong to ICT sectors. The figure was only 50 three years ago, he said.

The number of Hong Kong companies in the UK has exceeded 100.

Leading Chinese IT (information technology) companies such as Huawei Technologies, Lenovo, Founder and ZTE are included. And they all have located their European headquarters in the UK, according to Hum.

Huawei Technologies, which moved its European headquarters from Germany to the UK last year, has been awarded three major projects in the UK covering mobile, IP (Internet protocol) and next-generation networks.

The company's R&D centre in the UK is also under construction.

"Huawei's new investment will create more than 200 jobs to the local people."

"By setting up their headquarters in the UK, Chinese companies are closer to the European market and their R&D work is better targetted at the needs there,"said Hum.

Valued at about US$44 billion in 2002, the UK's IT product and service market is the largest and the most advanced in Europe, said Paul Grey, director of the Asia-Pacific region of the UK Trade & Investment, a government agency responsible for inward investment.

IBM has located its largest software development centre in Europe, and most of Sun Microsystems' new investment in Europe goes directly to the UK.

Besides ICT sectors, Chinese companies are also welcome to invest in bio-technology, healthcare and financial services, and to get listed in the London Stock Exchange (LSE), Hum told China Business Weekly.

"LSE will set up its China office in the latter half of this year," he said. "And surely it will pay more attention to Chinese companies that want overseas listings."

According to Hum, compared with listings in New York Stock Exchange and NASDAQ Stock Market, listing in the LSE costs less, and the requirements are more flexible.

"Moreover, the LSE has better liquidity and larger trade volumes than New York and NASDAQ," he said.

Five Chinese mainland companies are already listed in the LSE, including China Petroleum and Chemical Co, Beijing Datang Power Generation, Jiangxi Copper Co, Zhejiang Expressway Co, and Zhejiang Southeast Electric Power Co Ltd.

"(However) the UK may not be an ideal destination for Chinese manufacturers to expand overseas, as the labour costs in the UK are much more higher than those in China," Hum added.

Like other overseas investors, Chinese companies are treated exactly the same as their local counterparts, "but there are preferential policies targetted at foreign investors in certain fields," said Hum. He did not elaborate.

"UK Trade and Investment will offer Chinese companies free and confidential services during their investment in the UK," said Wei Kelei, the agency's manager of China operations.The tax rate in the UK is the lowest among European countries. The country has simple, clear employment laws,the least regulated employment market in Europe, highly-educated and flexible talents, as well as the world's most widely used business language, she added.

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