Press Release: New updated report - Opportunities for UK Businesses in China's Regional Cities

 

To read the full report, click here.

The focus for many British companies in China continues to be in a small number of large and familiar cities such as Beijing, Guangzhou, Shanghai and Shenzhen. However, business conditions in these cities are evolving quickly. In particular, numerous British companies are experiencing mature and increasingly saturated markets in these locations, with only niche opportunities for development, and growing competitive pressures from other foreign firms and increasingly sophisticated Chinese companies.  Moreover, factor input costs in China are at their highest in these cities. As a consequence, many British companies with a presence in these cities are actively seeking fresh business opportunities in a variety of China’s regional cities.

 

The report presents the findings of research conducted in 2011 by CBBC and the Centre of International Business at the University of Leeds for and on behalf of UKTI.  This report provides a framework for understanding the current state of development of China’s regional cities and the opportunities this presents to UK firms.

 

Key findings:

  • In economically advanced cities the business opportunity tends to be higher up the value chain matching the skill set offered by UK industry and commerce, especially for SMEs
  • The 35 cities identified in the report account for 17% of the population, 39% of GDP, and 47% of FDI.  Competition is not only coming from high profile international firms but also increasingly from nationally developed and regionally developing Chinese firms. 
  • Although the eastern regions still attract the highest level of FDI to China, the regions which are gaining share of FDI are all northern, western or central provinces including Hebei, Heilongjiang, Henan, Hubei, Hunan, Inner Mongolia, Jilin, Liaoning and Sichuan.
  • 12 “City Clusters” are identified which offer equivalent types of thematic opportunity and can also be defined by similar attractiveness levels across a range of business activity, ease of business due to road infrastructure and have equal levels of government structure in order to identify engagement.
  • The greatest challenges and barriers to trade and investment relate to government regulation, policies and bureaucracy.  UK companies are not formulating clear strategies in response to this.  
  • Companies seeking to serve local consumer markets in China will be attracted by the economic expansion, rising purchasing power and growing populations that the rapid urbanisation of China’s regional cities has engendered. In the 2008 report the more advanced coastal regions offered the most attractive business opportunities, this has now expanded to embrace the majority of mid to large Chinese cities across a much wider geographic space.
  • Companies looking to manufacture only are found in those cities near to the coast, from the far northeast to the South of China. Recognition of local resources, client clustering, adequate logistics and governmental support within this wide area then becomes important.
  • There is a strong match between the best R&D location and the density of leading Chinese universities.  Hangzhou, Suzhou and Tianjin should be priority regional cities for any firm looking to locate production and R&D in China.

 

 

 

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For business enquries please contact

Stewart Ferguson at China-Britain Business Council

Stewart.Ferguson@cbbc.org

 

Duncan Levesley at China-Britain Business Council

Duncan.levesley@cbbc.org

 

For press enquiries please contact

Fenella Barber at China-Britain Business Council

Fenella.barber@cbbc.org / +44 (0)20 7802 2008

 

 

Editor’s Notes

  1. UK Trade & Investment (UKTI) is the lead government organisation that supports companies in the UK trading internationally.  The China-Britain Business Council (CBBC) is UKTI’s partner for delivering trade services in mainland China. An extensive partner network includes the British Embassy in Beijing, the British Consulate-Generals in Shanghai, Chongqing, Guangzhou and Hong Kong, and eleven CBBC offices across mainland China.  The network assists UK companies by providing advice and information on primary and regional cities and the services provided by CBBC and UKTI are structured around providing advice, support, information, opportunities and making it happen.
  2. CBBC has 900 members including Alliance Boots, Associated British Foods, Arup, Barclays, Clyde Bowers, Diageo, DLA Piper, GKN, HSBC, Marks and Spencer, Peel Holdings, Pearson, Rolls-Royce, Synergy Health, Tesco, University of Nottingham, Virgin, Vodafone, although two-thirds of its members are SME’s including 4Energy, Benoy, Berry Brothers, Communicarta, ICTS Software, Jetion Solar, Lotus Engineering and Penhaligon’s. In the last year 130 new corporate members joined including Huawei, ICBC, Zaha Hadid, Sainsbury’s and Nokia. 80% of new members are SMEs. The top three areas of expertise of CBBC’s members are financial and professional services, engineering and education although companies range from life sciences to creative and media

 

 

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To read the full report, click here.