Two of our team leads have been blogging their visit to China and reviewing the growth opportunities in the region. Here, Nick Farr, Head of China Britain Services Group, highlights how confidence in the region could benefit UK business.
Reflecting on my most recent trip to Shanghai, what strikes is how much it has changed in recent months. Not at a physical level: while there remains considerable continued property development in these cities, the pace of infrastructure build – as reflected at least by cranes on the skyline – seems if anything to be moderating, which is no bad thing as the Government seeks to navigate a soft landing in property.
Rather the change is one not of body but of mind, of an ever-growing confidence in Asia, in stark contract to the ‘Old World’ where optimism is in decline.
While the UK is all talk of the double-dip recession, eurozone woes and stalling business confidence, the sentiment is very different in Asia.
Growth may be expected to stall, but few predict it will fall below seven per cent. Surveys show continued business confidence; businesses are looking for new investment opportunities; and the stockmarkets are cautiously hopeful of a rally.
There are clouds on the horizon, of course, with the talk of soft versus hard landing, but overall the clouds are much less black than those now affecting the UK and Europe. There is a sense of optimism, which, as John Cridland, Director-General of the CBI rightly points out, is so essential for growth.
Can the UK benefit from this?
Of course. In many ways there is a growing convergence between the UK and China, as emphasised by the recent visit of Li Changchun, the Prime Minister’s spokesperson, to the UK last month with the focus of strengthening trade, cultural and education links between Britain and China.
Trade and FDI figures provide hard evidence. Newspapers in Shanghai were full, not just of deals with UK businesses, such as Weetabix, but also of British celebrities – David Beckham has achieved superstar status, not just it seems in the White House, but also on the billboards of Shanghai. The UK brand is riding high at the moment. And the UK businesses I visited were all reporting strong growth in the region.
In an ever-shrinking world, UK businesses should take some cheer from these Asian sentiments. Both directly, in terms of the opportunities which China and Asia offer as an export market, but also indirectly. If we can share some of the feel-good factor, this could be one of the best ways to re-inject some growth into the economy.
Moving into China and Asia more generally may not be easy, and is certainly not without challenges, but the alternative may be far worse.
Next China diary: Barry Knight looks at the retail market in Shanghai
Partner and Head of China Britain Services Group
Grant Thornton UK LLP
T +44 (0)20 7728 2691
Image: (CC) Brian Jeffery Beggerly
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