George Archer talked to Yong Zhao, Chair of the British Chambers of Commerce (BCCSWC), South West China on a recent trip to Chengdu to ask why British companies, large and small should invest in Chengdu's economy.
TM: What role do you play in terms of trying to attract investment from British companies?
YZ: We find that we don’t have a strong voice when it comes to interaction with foreign governments – the members that are situated here give us a good understanding and they can help us a lot. The American Chamber is more efficient. They organise meetings with senators and other government officials, whereas we rarely, if ever have the chance to do this with our British counterparts.
We see the relationship between governments as very important – we are very willing to engage with the British government. Chinese culture promotes engagement on this level in a very big way.
TM: What kind of support can British companies expect to benefit from once they come to Chengdu, and is this support ongoing during their time here?
YZ: Despite whether they are members or not, they get help. We are different from other organisations such as UKTI (UK Trade and Investment) and the China-Britain Business Council (CBBC) in that they are able to gain sound and solid advice from us, and then when they situate themselves here they can join the BCCSWC.
Once they join, there are routine activities and events that we organise and host for companies, as well as meetings with the municipal government. We also provide a magazine and access to a website.
Some sectors require very specific help, and we facilitate meetings with the relevant sections of government and industry representatives to give them the best set up possible. We help them to make moves to gain access to certain market sectors.
TM:Like you have already said, the UKTI does make an effort to help UK companies set up here, and in my experience its British manufacturing company’s first port of call. How closely do you work with it?
YZ: We try and work with the UKTI very closely. Simon Mellon is now the head of trade and investment in UKTI Chongqing, but works closely with us. He’s very useful and helpful, and pays a lot of attention to Chengdu.
We are different to the UKTI: it is more focused on bringing trade delegations to China, showing them around and then leaving! While this is definitely helpful, we are trying our best to help the companies that come here by showing them exactly what is on offer from us in terms of help and getting established.
If there is a system in which we all share our roles – UKTI brings delegations in, then the CBBC conducts research specific to the companies that are inside that delegation and then we help them in a very solid way – i.e. we ground them in Chengdu and set up meetings with the right people, then the process would be altogether more efficient and would help investment proceed faster and benefit both the companies that are investing, and the local economy as well.
Whether we can achieve this or not is yet to be seen!
TM: Have you had good relationships with British institutions – governmental and non-governmental?
YZ: David Cameron visited before he was Prime Minister, but he actually visited Chongqing not Chengdu.
Lord Green, the previous Minister of State for UK Trade & Investment came to Chengdu and Chongqing twice and other UK ministers have come to Chengdu. Prince Andrew came to Chengdu – this made quite an impact on the local community!
There is a great want from Chengdu for British companies – it would be better for everyone to put their attention into developing their business: connecting with governments and developing capacities.
Regarding dialogue with the UK government we don’t have active and open relationship with it – I think that it has better relationships with cities and provinces in the East – especially Beijing, Shanghai and particularly Hong Kong due to its strong position as a financial centre, and established links from Britain’s rule there before 1997.
TM:What kind of obstacles can British companies be ready to encounter if they choose to set up in Chengdu?
YZ: China has opened up to so many sectors – and will continue to do so. Previously, foreign companies were only allowed to enter the country in partnership with a Chinese company – now they able to enter as a completely individual entity.
If you are a foreign company, there are certain bodies that are very well-equipped to assist you to settle in the local area and move onto the second step in specialist area.
There is a lot of help with marketing in the local area as well – sometimes this can be extremely difficult to do without help as the process differs in China to a lot of Western countries. You also have to take into account cultural differences and the language of course!
However, more and more Chinese people are learning English and this is proving to be a massive help; not just for recruitment and employment but for making sure your company is known in the area.
Compared to the East of China, I think that because there is so much more space for investment and Chengdu has more fertile ground for investment as part of the ‘Go West’ policy from central government, there are a lot fewer obstacles than you would otherwise expect.
TM:Do you think that the prevalence and power of Chinese SOEs stifle off competition, and is this something that British companies should be scared of?
YZ: You are absolutely right in saying this – one thing that we are missing is a strong SME sector, where the same sort of specialised high-tech clusters that exist in countries in Europe and of course the States benefit each other and lead in niche sub-sectors.
If the government is able to target these sectors it will help the country greatly. SMEs suffer a lot – if they want finance they have to put a lot of effort into securing it compared to the bigger SOEs.
Smaller companies need to show that they will get a good return on their money – 50% every year at least. If smaller and high-tech companies from the UK come here I think it would act as an encouraging message to other SMEs in Chengdu.
TM:Is the language and the way in which Chinese do business different, and could this be perceived as an obstacle?
YZ: I think that language is becoming less and less of an obstacle, as although decades ago the language of business in China was Russian, it is now most definitely English: Chinese businesspeople are very driven to learn it.
Regarding the way in which Chinese people do business, although culture clashes are uncommon in my experience, the way in which Chinese people do business is, in my opinion, far more emotional. It’s almost tiring in a way! If you are angry you can’t say that you are angry. If you are happy you can’t say that you are happy!
Everything has to be smooth – business is done according to the Confucian way. It’s almost like a ballet. In Britain, business in strict – it’s black and white. In China you have to find a harmony – decisions have to be taken holistically.
I’m not insinuating that having a local partner here is essential but you need to at least consult people about the way to go about making certain decisions and proposing certain things to the government, or whoever you deal with.
TM:What about financial institutions? Is banking ever a problem for companies here?
YZ: Over the past decade or so, there are many banks from Singapore and Hong Kong that have some over here, whereas a lot of companies started using private banks. However, in my opinion I have to admit that a lot of the banks are not that professional.
For example, there is one bank called OCBC, which is a Chinese-owned bank from Singapore that came to Chengdu that handled Chinese people’s money. Chinese companies (and people) are world-renowned for having a lot of cash to spend, and often they don’t know what to do with it!
They just spend the money and they started to find out that they begun to lose this capital because it wasn’t being spent properly!
British financial institutions are more highly valued by the Chinese people the management at these institutions is recognised around the world to be world-class. If more British companies came here, it would make China a better place.
TM:What about investment from China in Britain? Do you think it is becoming a two way street and do you think this is a good thing for China and/or Britain?
YZ: I would say that if we all try hard we will be able to work it into such a harmony that will be beneficial for both countries – we look at the British business system and see it as very beneficial for China, but then you have to look at China and how much capital the country has to invest, and the amount of money at our disposal could be a very good thing for Britain as well.
That is, there has been some recent opposition to certain Chinese bids for foreign investment – not specifically in Britain however.
The trouble with [the Chengdu government] is we don’t know that much – we don’t have the kind of strong links with the British government that we would like to, but there are so many areas that British companies can get involved in and benefit hugely from.