Flying the flag in China

Posted on 9 Nov 2010 by The Manufacturer

Howard Wheeldon applauds the PM-led delegation in China, although it's a case of better late than never.

Rather than just talking about miserable existing levels of export trade with China, the Coalition government is leading by example, attempting to sell British made products and services to the world’s second largest economy. Over the next few days no less than fifty senior British company executives together with David Cameron, George Osborne and Vince Cable will be banging the UK export drum. This is music to the ears of those of us fed up with hearing nothing but moaning about trade deficits and poor levels of UK export trade. What a pity that through most of the last thirty years Britain consistently failed to embrace the enormous potential that China offered to those prepared to believe that the great Chinese economic plan really would succeed.

Still it is never too late, so they say, and before going further let me genuinely commend the very many actions that over six short months this government has sent a variety of senior ministers to countries as diverse as India, Turkey, Saudi Arabia, UAE, and China, doing all that they possibly could to increase UK export trade.

Emphasis of this particular visit to China is clearly being placed on what service based industries and businesses can offer China – meaning what some pretty big UK based retail, banking and insurance companies could contribute to the ongoing story of Chinese growth. We suspect that the delegation will not come back to the UK empty handed. Some large British industry is also represented in China this week in the form of Rolls-Royce, although with a continuing EU wide ban on defence exports to China it is a shame that the actual number of large industrial companies really is very few. Nevertheless, many farming, food, drink, mining, energy, construction and resource businesses are included in this fascinating delegation, all ready and willing to show at first hand what they might bring to the China table. With infrastructure development lagging very far behind the speed that China’s manufacturing industries continue to grow there is much that British companies should be able to offer China provided they offer goods and services at a half decent price.

For too many years Britain has in my view sat on its backside believing that there was little it could do to build reverse trade with China. I personally well remember discussing the trade issue and how we should better embrace the fifty year Chinese economic plan over dinner with the then Hong Kong governor, the late Sir Murray MacLehose and UK Trade Secretary Cecil Parkinson toward the end of 1980 while in Hong Kong. Sad to say, though, that while we as individuals agreed that China and indeed also Hong Kong offered enormous potential to UK exporters as a nation, we subsequently failed to embrace the China story until it was almost too late. Suffice to say that for far too long UK trade policy toward China emanated from an absolute fear and lack of understanding or belief that through the 1980’s and 1990’s China could and indeed would achieve the economic miracle that it has. Today though and despite any reservation that any of us might have about internal Chinese policy I am delighted that Britain has at last set out to embrace China for what it is – a country with whom we should see trade as being only a one way import street.

The sceptic could of course argue that having set out to only double the amount of export trade that we currently do with China that this particular high profile mission could hardly fail! Maybe so but following so many years of having closed its eyes to what was going on in China and being so late in recognising the many opportunities open to British companies inside China it is right to say that we have to walk before we run. That means recognising that in a country such as this both the British government and the companies that are represented in the delegation will need to build trust with those that run China today. The UK delegation must also remember to listen to what the customer wants as opposed to doing what many past delegations and trade missions to foreign countries have done in the past – telling the potential customer what he can have.

It is a pity that as this high profile delegation appears to be predominantly based on pushing UK service based industries we could stand accused of ignoring the massive amount of technology potential that is currently locked within the many thousand British based small and medium sized enterprises that would love to sell their particular wares in China. I am not sure that these guys are being very well represented in China this week at all though I may hope that someone will tell me that I am wrong in this thought. Whatever, we should not lose sight that the UK also has superb manufacturing expertise and also small science based component technology to offer the Chinese. Our small and medium sized enterprises need far better representation than they currently get. Instead of waiting for them to come for export help and assistance the government should make better attempts to go out and find them. Indeed, we all need to remember perhaps that just as China was through its long history regarded as a nation of entrepreneurs so too should the same be said of Britain’s small and medium sized enterprises today.

It is of course up to larger British companies to sell themselves but having said this it is always the role of the British government to provide whatever lead on trade that they can. Back in July Foreign Secretary William Hague visited China, no doubt laying the foundations for the prime ministerial visit and business delegation now taking place. British foreign policy is at last being shaken at the core. This new ‘distinctive’ based policy is not only seen as an attempt to elevate how Britain is seen abroad but also to elevate the relationship with emerging powers such as Brazil, The Gulf states and other countries in Latin America and South Asia where UK foreign policy has for too long remained in the dark ages. Alongside is the ambition that Britain will manage to increase the level of export trade done with each nation involved. So, at long last, a welcome shift of emphasis that with luck will ensure that UK foreign embassy staff now play a very much larger part pushing the UK export trade flag than hitherto.

Howard Wheeldon, Senior Strategist, BGC Partners