Geopolitical complexity is concerning for business community, says report

The Chinese business community in the United Kingdom has voiced its concern about the geopolitical challenges that have jeopardized the otherwise wider competitiveness of the business environment in Britain, a recent report shows.

The China Chamber of Commerce in the UK published its 2022 report on the development of Chinese enterprises in the country on Thursday.

"The report is a way for us to be the bridge between UK and China, to represent our members, to be the voice of our members," said Fang Wenjian, CCCUK chairman.

"Our membership has reported a higher level of pessimism than in previous years in terms of the business environment in the UK which they attribute, in part, to escalating geopolitical tensions and challenging China-UK relations."

The report was carried out in July and August, and 79 companies, ranging from big Chinese state-owned companies to small and medium-sized private enterprises, have responded to the survey via questionnaire.

It found 78 percent of companies view a "complex geopolitical landscape impacting China-UK relations "as a top challenge to their operation in Britain, up from 53 percent in 2020, when the chamber first started publishing the annual report.

Against the backdrop of an increasing instability and sluggish economic growth across the globe, the report said 66 percent of companies perceive the UK business environment as having worsened during the last two years, and the number of companies saying they will make further investment in the UK has fallen for the third year in a row.

"If this trend continues, the UK could lose its competitiveness over other territories as attractive destinations for Chinese investment," said the report.

Bao Ling, minister of China's Embassy in the UK, said during the launch ceremony: "For China-UK cooperation to move forward, principles such as mutual respect and mutual benefits need to be observed.

"It is hoped that the UK will provide and maintain a fair, just and non-discriminatory environment for Chinese businesses in the UK as a sound and mutually beneficial business relationship is in the fundamental interests of the people of both countries."

Despite challenges, the report said the appetite from both sides to continue to drive collaboration remains, focusing especially on UK government's key policies of levelling up and net-zero.

Jinny Yan, chief China economist at the ICBC Standard Bank, said the UK's levelling up policy is essentially addressing the inequality across the different regions and social classes in the UK.

"In China, every part of the policy making is surrounding common prosperity, like how to lift Chinese poor people out of poverty and avoid the middle-income trap," said Yan, adding that the net-zero policy is another common area that has a huge attraction for Chinese companies that are strong in industries related to electric vehicle and green energy.

"I think China is able to produce new energy cheaper than anywhere else in the world, and the UK, on the other hand, has the financial sector enabling sectors to make sure that this is happening faster globally," Yan said.

"However, something that is unhelpful at this point is a lack of understanding," she added.

Fang, chairman of CCCUK, said: "Chinese companies have been not only contributing to GDP, creating jobs, but also adding to the diversity and inclusion of UK as a whole."

Nearly 80 percent of the surveyed companies with more than 100 employees have the majority of their workforce made up of locals, and 40 percent of the Chinese companies have branched out their operation from London to the other regions in the UK, and 30 percent are planning further investment.

According to Grant Thornton, an accounting firm that tracks the Chinese businesses in the UK, there are more than 800 Chinese companies in the UK, which generated more than 63 billion pounds ($77 billion) in revenue and employed around 61,000 people in 2021.

John McLean, chairman of Institute of Directors, City of London and a senior advisor to CCCUK, said that on top of the direct employment, there is probably another 130,000 local jobs indirectly created by Chinese companies.

"China's contribution to the UK is significant … and we cannot afford in this environment to lose this kind of contribution, because what we actually want is further investment and development," said McLean.

"What the British government has got to do is to demonstrate certainty and consistency of approach, because once the Chinese investors have the beliefs that they are now on an even playing field, that at least they don't have all these ups and downs, then they can start to make plans."