Visible progress in 'invisible' sectors

Business expert makes case for trade growth between China and the UK

Trade and investment between China and the UK will skyrocket as the world's second-largest economy increasingly moves into service-based industries including finance and architecture, preeminent British business expert Lord James Sassoon has predicted.

A former British government minister and the current chairman of the China-Britain Business Council, Sassoon says the increase in economic ties will be driven by China's inevitable expansion into industries that align with the UK's field of financial expertise and commercial experience.

The 57-year-old says the catalyst will be China's rise in the so-called "invisible" sectors such as financial services, design, engineering, legal services, architecture, healthcare and education.

"The UK has great expertise in invisible sectors," Sassoon says. "As China moves increasingly toward becoming a consumer-based society, its needs as a nation will match what the UK has to offer."

Sassoon will lead a British delegation to Xiamen this month for the 17th China International Fair for Investment and Trade, to be held Sept 8-11.

Law firm DLA Piper, engineering firm Arup and architecture firm Foster and Partners will be among the heavy hitters in the delegation, which is expected to include representatives from more than 30 businesses.

"Over the past 16 years, this fair has become one of the most important for Chinese and British businesses to identify and secure investment opportunities in both of our countries," Sassoon says.

He says while the British focus at the fair will largely be to facilitate negotiations between businesses, he is looking forward to meeting with Chinese government officials to make the UK's expertise and economic credentials better known.

Government representatives from Chinese provinces including Fujian, Henan, Hunan and Hubei are among those he is eager to meet because he says these provinces represent a large part of China that is becoming increasingly connected.

Optimistic about his upcoming visit, Sassoon was quick to point out the UK and China's bilateral trade reached record levels earlier this year.

British government statistics released in June showed UK exports to China have doubled since 2009, and based on current trends, China could become the UK's fourth-biggest goods export market within the next five years.

In the first quarter of this year, the value of UK exports to China averaged more than 1 billion pounds ($1.56 billion; 1.18 billion euros) per month, an unprecedented figure.

But despite the positive data and projections, Sassoon says Britain "wants to do better".

While the mutually advantageous economic boon that service-based industries could bring is still largely on the horizon, Sassoon says Britain's manufacturing sector is already making inroads in the Chinese market.

Although at first glance the UK appears to lag behind other countries such as France and Germany in terms of exports to China, Sassoon argues that British exports to Asia's economic powerhouse are often understated because they are bundled in with exports made by other European nations.

The Airbus aircraft for instance, a popular French import that is increasingly a regular feature in the skies above China, runs on engines made by Rolls Royce in the UK.

In April, Sassoon says, he was in Beijing to discuss trade matters with Vice-Premier Wang Yang. In the meeting room next door, French President Francois Hollande was discussing further Airbus sales to China with Premier Li Keqiang.

"I said to Vice-Premier Wang Yang that we are grateful to Hollande for selling Airbuses to China, because there is more value for Britain in Airbus sales than there is for France," he says.

Sassoon says Britain's manufacturing sector has experienced a revival in recent years, largely due to an injection of foreign capital that has helped bolster struggling, iconic British brands. Notable examples include Indian conglomerate Tata's acquisition of Jaguar Land Rover and Germany's BMW buying Mini.

Chinese companies have also joined in on the investment bonanza.

In 2005, SAIC Motor Corp acquired British automaker MG Rover. Zhuzhou CSR Times Electric acquired British semi-conductor manufacturer Dynex in 2008.

In both instances, the fresh injection of capital revitalized the British brand stalwarts, allowing them to grow their business and increase local employment.

Sassoon says both examples show when it comes to smart, foreign acquisitions, Britain is open for business.

"I think no country in the world has consistently welcomed foreign investment as much as Britain," Sassoon says proudly.

"We've been a trading nation for hundreds of years. We are a small country geographically, so we have to rely on commercial ideas and spirit. At a political level, we know this is where we can get ahead economically."

He says another example which demonstrates the UK's open-minded take on foreign investment was the way it welcomed the Chinese telecommunications giant Huawei.

In stark contrast, both the US and Australian governments greeted similar overtures from Huawei with suspicion and raised concerns over cyber security.

In September last year, Huawei announced plans to invest 1.3 billion pounds over five years to expand its UK operations, creating up to 700 new jobs.

Sassoon says the UK is also committed to providing a level playing field for international investors on infrastructure projects. He says the nation's need of capital for infrastructure development and China's need to invest foreign reserves into projects with a steady income is a compelling and complementary match.

To date, China Investment Corp has bought 8.68 percent of the UK utility group Thames Water and 10 percent of London's Heathrow airport.

China's State Nuclear Power Technology Co is considering participating in the UK's nuclear project NuGen, after Spain's Iberdrola and France's GDF Suez began to look at offloading a portion of their holdings in the project recently.

Sassoon says China's investment in British nuclear projects makes sense from a business perspective.

"I know China has some very experienced nuclear operators. It's logical for those partnerships to want to get into the UK's new nuclear projects," he says.

Although coy about commenting directly on the viability of Chinese nuclear companies entering such a strategically important sector in the UK, Sassoon says he sees "no problem, provided Chinese companies make their approach in a sensible way, in partnership arrangements".

In May 2012, a meeting between UK Prime Minister David Cameron and the Dalai Lama prompted a diplomatic freeze with China.

The icy relations began to thaw in June after British Foreign Secretary William Hague acknowledged that Britain recognizes the Tibet autonomous region as part of China, and stated Britain will not support "Tibetan independence".

Sassoon says the temporary cold snap in the diplomatic relationship did not hinder growing bilateral business relations between the two countries.

"Over the past year, business went on because our businessmen and political leaders are actually very practical," he says.

Nonetheless, he expects the strengthening political relationship to help further business links grow in the future, particularly in sectors that require government support.

As chairman of CBBC, Sassoon says he hopes to do his best to encourage and support British and Chinese businesses strengthen commercial cooperation. He says his team also hopes to help both Britain and China "make sure the relationship between our governments is even more practical minded and business focused".

Sassoon says he looks forward to achieving a lot during his tenure as CBBC chairman, a stint which ends in 2016 but could be renewed for a further three years. "I think the CBBC already do a good job," he says.

"But I want to do even better."

cecily.liu@chinadaily.com.cn