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• Looking back, thinking forward
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The China-Britain Business Council and its predecessor organisations have worked energetically over the past 50 years to establish a platform from which British business can launch their operations in China. But the real challenge will come in the next 50, writes CBBC President Lord Powell.
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It's 50 years since the predecessors of the China-Britain Business Council started assisting British companies to do business with the People's Republic of China at the end of the Korean War. We have travelled a long distance in the intervening period, and there is much to celebrate.
This special, one-off edition of the China-Britain Business Review traces the development of the CBBC and its predecessors over the course of those momentous 50 years, interspersed with personal memories, reflections and anecdotes of business people, diplomats and others who have seen China changing before their eyes. We have a message of support from Premier Wen Jiabao, whose visit to the UK last month was a resounding success and underscores how highly regarded CBBC is at the uppermost levels of Chinese government and society. We also have messages recognising CBBC's achievements from Prime Minister Tony Blair, from Wan Jifei, the chairman of CBBC's partner organisation in China, the China Council for the Promotion of International Trade, and from the Chinese ambassador to the UK, Zha Peixin.
We are marking our 50th anniversary with a number of events both in the UK and in China. But, satisfying though it is to celebrate our half-century and the substantial increase in two-way trade and investment, that is the past. We must look forward. China is set fair to become one of the world's largest economies. China's economic growth is a story in itself, exceeding 9 per cent last year and attracting foreign direct investment at the rate of more than US$1bn a week. In 2003 China was already the world's sixth largest economy - and will overtake France and Britain shortly – and is well on the way to its 2020 target GDP of US$4 trillion. Its record pace of economic growth will, if sustained, put China on a par with the United States within a generation, some experts believe. I recall how Deng Xiaoping predicted to Lady Thatcher in 1984 that within 50 years China would be hard on the heels of the major Western economies.
Last year saw a change of generations in China's leadership, bringing to the fore younger top officials who are more internationally minded. The "fourth generation" leadership in China, led by President Hu Jintao and Premier Wen Jiabao have brought a clear-headed, pragmatic vision and management that can only be to China's long-term benefit. But there is much more than just a change of personnel. There have been highly significant changes to China's constitution over the past two years. The role of the private sector and the right to private property are now enshrined and protected.
China's leaders know that it will not be plain sailing ahead. There are the ever-present dangers of the economy overheating and of over-investment, which depresses prices and leads to vast stocks of un-saleable goods. The position of some of China's largest banks is still precarious. Creating jobs for China's labour force while simultaneously reforming the state-owned enterprises and reducing their labour force and coping with mass migration from the countryside to the towns is a formidable challenge which would daunt the most ambitious economic policy maker anywhere in the world.
The challenge for British business
The 50th anniversary of the establishment of trade relations between the UK and the People's Republic of China offers an excellent opportunity for a step-change in relations between Britain and China. We must grasp it. Prime Minister Blair set up a China Task Force shortly after his own return from China last summer with a mandate to come up with ideas for upgrading the relationship in a wide range of spheres. Deputy Prime Minister John Prescott, himself a regular visitor to China, chairs the task force, underlining the government's commitment to achieving results. The Chinese have reciprocated by establishing a parallel task force under the lead of State Councillor Tang Jiaxuan, the former foreign minister.
Britain's trade and investment with China has expanded mightily in the past 50 years with two-way trade touching £14.5bn last year. In absolute terms that sounds pretty impressive. But the balance is heavily in China's favour, in a proportion of nearly 5:1. And although Britain assuredly does better in invisibles and is the leading European source of investment in China, the market share of our exports remains unacceptably small.
That is disappointing, given how rapidly China is growing, and it has to change. We need more British companies to enter the China market and take advantage of the opportunities, provided always that they can do so profitably. We need better market intelligence on what those opportunities are. Our companies have to be more aggressive and competitive. They must have solid backing from ECGD.
The best British companies are doing well, winning major infrastructure contracts and successfully navigating the indisputable difficulties of doing business in China. The financial services sector in particular – banking, asset management, life insurance – offers great prospects for the future. Smaller British companies are also competing successfully, selling anything from special windscreens for boats and loudspeaker systems for supermarkets to media training courses.
There is no magic about these success stories. These companies have simply followed good business practice: investigating the market thoroughly, establishing the best contacts, following a sound business strategy and, of course, seeking out good advice, particularly from the China-Britain Business Council. The British Centre in Beijing, which opened in July 2003, is an excellent example of support organisations operating well together, providing in one place all the information and advice that new business ventures need.
In the short term, if the UK is to take full advantage of the prospects that will emerge in ever greater numbers over the coming years and decades, I would like to see three major steps taken. The first is to set still more ambitious targets for increasing two-way trade. Chinese officials have recently talked of US$40bn as the appropriate goal for 2010, which would represent a doubling of present levels. The second is for the Chinese to recognise explicitly the need to achieve a better balance in our trade, within a framework in which both sides continue to grow their exports. This can be achieved in a combination of ways, including greater public purchasing from the UK and a relaxation of restrictions on some defence-related sales to China. The third is a commitment by the British government to step up support for CBBC to enable us to provide even better services to British companies. This will enable CBBC to set up a more extensive network of China business services for companies in the UK regions. It will also enable us to extend the British footprint in China itself, with service points for assisting British companies spread throughout China. This is necessary if we are to match the diversity of the opportunities now emerging in every part of that vast country.
At the CBBC we believe there is still much to do to promote the China market to British business. China remains, for many, a remote and challenging market and is perceived to be too difficult, for reasons of culture, language and the lack of clarity of the business environment. But provided companies do their groundwork thoroughly and do not stray from the fundamental principles that govern doing business elsewhere in the globe, there are good returns to be had. There are more and more British businesses succeeding in China today.
We are embarking on new programmes and expanding our facilities, including the opening of our seventh office in China, in Nanjing, the better to serve British business in China. We remain at the forefront of initiatives to promote the China market far and wide within the UK.
I am immensely optimistic about China's future. After a century of turbulence and upheaval, conditions in the country have never been more stable or secure. Our work at CBBC is really only just beginning.
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Cause for celebration, pause for thought
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CBBC Chief Executive Peter Nightingale explains why the entire issue is devoted to our 50th anniversary.
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To mark the 50th anniversary of CBBC and its predecessor organisations, we present a special edition of the China-Britain Business Review. Our anniversary gives us the opportunity to reflect on our achievements and developments over an extremely eventful half-century in China's history.
What comes through strongly is how those promoting trade and business with China stuck to their task, even when the tide was against them, or when the prospects for securing business seemed almost non-existent. Such commitment is much appreciated in China and serves to explain why CBBC is now held in such high esteem at all levels of Chinese society.
But celebrating our past history also provides us with the perspective and knowledge to plan for the future. The coming years will bring challenges and opportunities the like of which we have not seen before. British business – and CBBC – must rise to these challenges if we are to grasp the business opportunities which the unprecedented growth of China will offer. All of us at CBBC will do our utmost to help UK companies achieve this potential.
Assembling this unique issue of the China-Britain Business Review has been a rewarding undertaking. We are extremely grateful to our many contributors who have delved into their memory banks to produce gems of insight and reflection. We hope that the readers of the China-Britain Business Review will enjoy sharing in these recollections as much as we have done.
Our intention is that the June 2004 issue of the China-Britain Business Review will stand the test of time as an historical record as well as an enjoyable read.
Our regular columns have taken the month off. Normal service will be resumed in our next issue.
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