EY ITEM Club Special Report on Exports
Why UK and Chinese businesses make natural partners
As the UK seeks to grow its exports in the years to come, China will be a key target market. There are many reasons why the UK makes a great strategic business partner for China, fostering Sino-British trade in both directions. These reasons include:
- International trade: The UK’s long trading history means UK businesses have vast collective experience of working with different cultures worldwide. And UK companies have been trading and forging commercial partnerships in China for centuries.
- Entrepreneurship: Britain’s renowned creativity and thriving entrepreneurial culture are encapsulated in many of the world’s leading brands.
- Innovation and invention: The UK is a hot bed of innovation, bringing the world the electric light bulb, the telephone, the jet engine and the world-wide web and also the carbon fibre, a revolution in engineering.
- Inward investment: Britain is a world leading investment destination – further testament to the openness and international-mindedness of the UK economy.
- Gateway to Europe: For business partners from China and elsewhere, the UK makes a great access point to the huge European marketplace.
- A competitive tax regime: The UK Government’s business-friendly tax regime fosters and encourages international investment and innovation.
UK businesses entering the Chinese market can face some legal and cultural challenges, often requiring detailed locally-sensitive advice. But as China’s economic growth rebalances from investment and exports to consumption and imports, increasing numbers of British companies are growing their sales there and reaping the rewards.
While the UK’s thriving services sector is a principal engine of growth for Britain, physical goods still account for almost half of UK exports. EY’s recent UK Goods Monitor shows that automotive, engineering, oil & gas and pharmaceuticals will be at the core of UK goods export growth over the next five years.
The figures speak for themselves. UK goods exports to China are rising by 6.9% a year, with the UK’s West Midlands benefiting particularly strongly, making China that region’s second-largest export partner. What’s more, UK automotive exports to China are expected to grow by 11.6% – outpacing overall market growth of 9.9% – making China the UK’s top automotive trading partner by 2017. UK biopharma exports to China are expected to double between 2012 and 2017 to US$104 million.
Partnerships that combine the UK’s world-leading products and services with China’s rapid economic growth and rising disposable incomes create a win-win for both countries. UK business is already tapping into the China opportunity. But the massive potential is only just beginning to be realised.
Combining the best of China’s and the UK’s business expertise and innovation and taking our collaborations out into new markets, can only make us stronger. By working together we will be forging relationships that will benefit both our countries and bring real rewards for our businesses and economies.