Chinese economic slowdown could create chances for UK businesses
Release Date 01 December 2011
Following news that Chinese export figures are down, leading to predictions that the growth of the Chinese economy is slowing, Professor Simon Collinson, a China expert at Henley Business School, University of Reading, said the change presented greater opportunities for British businesses to trade in China, and attract Chinese investment into the UK.
Professor Collinson, Professor of International Business and Innovation, Henley Business School, University of Reading and Guangbiao Chair Professor, School of Management, Zhejiang University, said the news was another strong indication that the growth markets were in emerging economies like China, and UK firms must adapt to this quickly.
Professor Collinson said:
"The slow-down in Chinese exports has been anticipated, given the long-running downturn in its key export markets - the USA and Europe.
"It is partly welcomed by Chinese authorities because they are looking to gently slow-down economic growth generally (from 11% per year to around 8%), and they want to reduce dependence on both exports and cheap manufacturing exports.
"The above changes fit with key elements of the recently launched 12th Five-Year plan (2011-2016), which focuses on the promotion of consumer-led growth and 'inclusive growth' in China (rather than exports); further development of specific, high-technology industries (including energy, biotechnology and R&D intensive manufacturing); and the promotion of service industries in China.
"Over 50 percent of manufacturing exports from China are from foreign-owned firms in China, including leading British manufacturers. As their export sales decline they are particularly feeling the squeeze and will be trying to sell more in China and other emerging markets.
"For some Chinese businesses this may boost their move towards direct investment into Europe and the USA. FDI (Foreign Direct Investment) from China into Europe has increased rapidly in recent years, including a rise in Chinese mergers-and-acquisitions (up 35 percent in the first 6 months of this year). This translates into greater opportunities for British businesses to attract funding and develop joint-ventures which will give them access to the Chinese market. However, these also carry the risks of losing technology and intellectual property to Chinese firms. Moreover, the shift away from US, German and French inward investment may lead to a reduction in foreign-owned manufacturing employment in the UK."
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Please call Pete Castle, University of Reading press officer, on 0118 378 7391 or p.castle@reading.ac.uk for more details or interview opportunities.
Simon Collinson is Professor of International Business and Innovation, Henley Business School, University of Reading and Guangbiao Chair Professor, School of Management, Zhejiang University.
Professor Collinson recently gave the lead presentation to set the scene for a discussion on: "How can British business benefit from China's economic growth?" hosted by the Industry and Parliament Trust at the House of Commons.