UK business welcomes China's new normal

Slower growth brings more trade opportunities, leaders and experts say

With new normal becoming the catchphrase to describe China's economic situation, British business leaders and experts say it will bring more opportunities for UK companies.

James Sassoon, chairman of the China-Britain Business Council, says China is undergoing a period of further transformation.

"It is stepping away from labor-intensive exports toward a more highly mechanized and service-oriented economy, with heightened resilience on domestic demand and added emphasis on environmental sustainability," he said at the China Business Conference in London.

In Beijing on March 5 at the National People's Congress annual session, Premier Li Keqiang announced a growth target of about 7 percent for this year as China moves toward lower, more sustainable growth.

"We should welcome and embrace these changes, and make sure we are well positioned to seize the opportunities they present," Sassoon says.

Attended by about 500 delegates from Britain and China, the conference was organized by the council, which helps British companies to increase and develop their business with China. The aim is to create a forum for discussion and cooperation between the two countries.

Jim O'Neill, former chairman of Goldman Sachs Asset Management, says: "Of course China is slowing down. It has been doing so for some years, but there are a lot reasons why it's slowing, and one thing that strikes me is the deliberate policy of a better quality of growth, over a focus on quantity."

O'Neill is a British economist best known for coining the acronym BRIC, standing for Brazil, Russia, India and China.

When the latest monthly Chinese economic data were published, many comments were again about China's slow-down, O'Neill says.

Despite the slowdown, he says, China remains on track to become the largest economy in the world and overtake the US by 2027, a scenario he predicted 13 years ago.

Even with China's GDP growth slowing to 7 percent a year, he says, the country will create another India every two years and another South Africa every three months.

O'Neill believes that the Chinese leadership is trying to shift the balance from production to consumption, putting efforts into boosting equality among Chinese manufacturers and creating healthcare and consumption opportunities for people from middle income and lower income backgrounds.

Sassoon's and O'Neill's views are supported by British companies exploring the Chinese market or ones that have collaborated with Chinese partners.

David Robinson, president of Speedo International, which is based in Britain and manufactures and distributes swimwear and accessories, says China's new normal will place great emphasis on fitness and healthy lifestyles.

Speedo's products are available in most first- and second-tier cities in China, and the company is now working on increasing its e-commerce presence.

Chris Hill, development manager of Lifecycle Marketing, which provides education programs for pregnant women, says China's new normal will boost the market for his business, with great emphasis on healthy lifestyles and quality of life.

Hill says although China's economic growth is slowing, the country still represents a huge market for Lifecycle, given that there are 16 million pregnancies a year in China, compared with 800,000 in Britain.

The company is looking to expand into China through joint ventures and marketing strategies to attract China's emerging middle class, Hill says.

Ni Jian, charge d'affaires at the Chinese embassy in London, says, "China's growing demand for brands provides great opportunities for reputable British brands with a high-recognition and reputation in the Chinese market."

Exports of British cars to China have increased sevenfold since 2009, the British Society of Motor Manufacturers and Traders says. Last year, 137,410 UK-built cars were exported to China, a year-on-year increase of 14.5 percent.

The Chinese embassy in London says that from 2009 to 2014, trade between China and the UK doubled, from $39.1 billion to $80.9 billion. The UK is China's second-largest trading partner in the European Union.

The portion of trade that involved vehicles, aviation and communications expanded last year and China became Britain's largest supplier of electro-mechanical products.

"The fast growth of e-commerce in China will also provide increasing opportunities for British products to enter the Chinese market."

China's growing need for innovation is leading to a big demand for new technology, techniques and products, Ni says.

Britain, with its advanced manufacturing, high-tech and clean-technology sectors, is well positioned to supply this market, Ni says.

"As China opens up its service industry further to foreign investment to satisfy its big domestic demand, foreign capital in finance, healthcare, education and pension sectors will have great opportunities to expand in China," says Ni.

Paul Rogers of Little Bridge World Ltd, an English-language education provider, echoes the idea that China's economic new normal will boost the demand for English-language learning because highly educated and internationally minded talents will be valued more in the market.

"As China focuses more on innovative growth and internationalization of its companies and industries, there will be a bigger market for English learning," Rogers says.

What's more, the internationalization of the renminbi is providing great opportunities to the UK, as a competitive offshore renminbi center, Ni says.

London's efforts to become a European hub for offshore yuan activities began in September 2011 when the then Chinese vice-premier Wang Qishan welcomed private sector initiatives for the development of an offshore renminbi market in London.

Since then, banks and other commercial institutions have been rapidly developing yuan products and services, including yuan deposits, financing, foreign exchange trading and the issuance of dim sum bonds.

London's development of a renminbi offshore center is gaining pace as the Chinese currency internationalizes and China's trade and investment flows with the UK increases, experts say.

Last year, Sino-UK bilateral trade reached a new high of $80.9 billion, a year-on-year increase of 15.3 percent. The 2015 target for trade is $100 billion.

In 2014, key mergers and acquisitions and China's investment in the UK exceeded $7 billion. Infrastructure, property, research and development centers, advanced manufacturing and retail are popular sectors for Chinese companies investing in the UK.

For example, China Life Insurance Co, the country's largest insurer, together with Qatar Holding LLC, bought a building in Canary Wharf London, for 795 million pounds ($1.17 billion; 1.1 billion euros) in June.

In the same month, China Construction Bank Corp bought a central London office building off-market for about 110 million pounds.

And in September, Huawei Technologies Co Ltd acquired the UK's Neul, which specializes in the Internet of Things.

As of Dec 31, cumulative investment by Chinese companies in the UK exceeded $40 billion, making the UK the largest recipient of Chinese investment in the European Union.

The internationalization of Chinese firms has also provided great opportunities for Central Hall Westminster, a London venue that has hosted many outbound Chinese events and firms in recent years.

Examples include a conference by the Chinese telecommunications giant Huawei and Chinese film festivals in London, says Kevin Blackman, senior sales manager at Central Hall Westminster.

"As Chinese businesses become more international-minded as a result of China focusing on international growth and innovative growth, we will have more clients from China, and we are going through a process to adjust our services to their needs," Blackman says.

Experts and business leaders expect that Chinese investment in the UK will continue to grow in the coming years as more Chinese companies go abroad, and the UK is ideal for helping Chinese companies to boost their internationalization, brand development and innovation.

Ning Hui contributed to this story.

Contact the writers through zhangchunyan@chinadaily.com.cn