British companies are embracing China's first-ever international import expo in Shanghai, in an effort to hedge against uncertainties as the United Kingdom leaves the European Union.
Flagship British brands well established in China, such as Jaguar Land Rover, Bentley, British Airways, Standard Chartered and HSBC, will take the lead alongside small and medium-sized enterprises looking to test the waters in China for the first time.
The China International Import Expo, also known as the CIIE, runs from Nov 5 to Nov 10. The UK is one of 12 countries of honor at the expo.
"CIIE offers British firms a unique platform to connect with Chinese businesses, investors and consumers," British Trade Secretary Liam Fox told China Daily, days before travelling to China as head of the British delegation.
For British companies, the CIIE is a key opportunity to "secure export orders and attract investment to help grow their businesses," he said.
Hundreds of British companies are expected at the expo, covering sectors including technology, healthcare and life sciences, financial and professional services, education, creative industries, consumer goods, food and agriculture products, aviation and aerospace, automotive, AI and big data.
British luxury carmaker Bentley is displaying its $214,600 third generation Continental GT before the model goes on sale next year. Astra Zeneca is showcasing a range of pharmaceutical products, and Kenwood is showing its all-in-one kitchen machines.
A total of 2,800 companies from dozens of countries will participate in the Expo.
Many immediate deals are expected, considering that about 160,000 buyers from more than 80,000 companies have signed up for the event. The Chinese retailer Suning, for instance, said it intends to import at least 1,000 different products and services not available in China.
"The CIIE reflects the Chinese government's determination and commitment to continue to further open up its market to the world, and to continue to forge relationships to build a successful and long-term international trade model," said Ken Murphy, executive vice-president of Walgreens Boots Alliance, the parent company to Boots UK.
Booming UK China trade
British companies' enthusiasm for the CIIE coincides with a period of booming UK-China trade.
Bilateral trade between the two countries hit $79 billion in 2017, up by 6.2 percent year-on-year. More significantly, British exports to China grew by 19.4 percent in 2017, to reach $22.31 billion, according to Chinese government statistics.
One driver is Britain's imminent departure from the European Union, which prompted British businesses to look further afield for global trade opportunities, said Ed Ratcliffe, head of research and advisory at the London-based think tank Asia House.
"Brexit creates uncertainty both in terms of trade relations and market access to the EU trading bloc where a lot of business is being done. This uncertainty is causing companies to look further abroad, which may accelerate UK-China trade relations," Ratcliffe said.
Another driver is growing complementarities between the British and Chinese economies, said Matthew Rous, chief executive of the business association China-Britain Business Council.
"Over the past 30-40 years we've seen the Chinese market significantly transformed. A large wealthy middle class emerged, creating demand for the best products globally. That's great news for the best of British brands, across sectors like fashion, food, healthcare and education," said Rous.
"Furthermore, the rapid growth of China's e-commerce market is helping British brands to quickly access Chinese consumers without the invest in a physical China presence," Rous.
In 2015, China surpassed the US to become the largest e-commerce market in the world. Back then, China's e-commerce retail sales stood at $584 billion. That figure had almost tripled by 2018 to $1.5 trillion.
Many British companies have already pocketed their profits, including the likes of Waitrose, Holland & Barret, Cow & Gate, Ella's Kitchen and Clarks.
The Chinese e-commerce platform JD saw the number of UK brands selling on its site in 2017 doubling from the previous year. In February this year, JD signed a deal with the UK government with a commitment to sell 2 billion pounds of UK goods to Chinese consumers over the next three years.
Consumer products aside, British cutting-edge technology is high in demand as China makes a structural shift from a former manufacturing hub to a knowledge economy.
For this reason, the British government has made innovation the key theme of the UK pavilion, to showcase many futuristic technologies. The London-based Hypervsn will showcase an augmented reality mirror that lets users meet, interact and even take their photo with famous animated characters.
Inde, another technology firm, will showcase their next-generation augmented reality mirror.
Meanwhile, the software company Engage will feature a software platform that can help companies make their workplace more collaborative among employees.
In addition to displays, the China Britain Business Council is gathering hundreds of businesses to share thoughts on hot topics such as Brexit, cross-border mergers and acquisitions and intellectual property protection. Cambridge Consultants is gathering Chinese and British entrepreneurs and scientists for a conference to discuss artificial intelligence collaboration.
More than just trade
The CIIE's significance for the UK goes beyond trade. British services companies across the fields of banking, accounting and consulting are also sending big teams to the CIIE for potential clients.
For instance, banks such as Standard Chartered, HSBC and Santander are promoting their trade-related solutions such as trade financing, cross-border supply chain financing, and foreign exchange risk management. The importers and exporters gathering at the CIIE represent their perfect client focus groups.
"We will be explaining at country pavilions at CIIE how we are helping our clients prosper in China through seminars and training," said Antony Hung, CEO of Santander Asia.
HSBC and Standard Chartered are both giving a big push to recruit import and export clients along the Belt and Road trade routes, believing that their established presence along these routes give them an advantage.
Proposed by President Xi Jinping in 2013, the Belt and Road Initiative advocates improved connectivity of infrastructure, trade, ideas and knowledge between Europe and Asia.
"Our in-depth knowledge of Belt and Road countries' political, economic and cultural environment make us an indispensable partner for our clients," said Jerry Zhang, CEO of Standard Chartered in China.
Standard Chartered has funded more than 50 Belt and Road deals in 2017 alone, and last December it announced an additional $20 billion commitment to Belt and Road projects by 2020. Examples include $515 million of financing for a power plant in Zambia, a $200 million loan for a Bangladesh electricity plant and a $42 million export credit facility for a Sri Lanka gas terminal.
Despite British companies' keen efforts to crack the China market, they are still a long way from realizing their full potential. The EU remains by far the biggest export market for the UK still. Although China became the UK's sixth-largest export market in 2017, these were only 3.6 percent of its total, according to figures from the UK government.
The UK government is now working hard to support British exports into China and the Belt and Road markets. The fact that Richard Burn was the first of nine Trade Commissioners appointed for the UK's overseas markets shows the significance of China from the British government's perspective.
Meanwhile, the government agency UK Export Finance has committed 25 billion pounds of funding to support British exports to economies along the Belt and Road trade routes.
"As the Belt and Road develops, there will be secondary opportunities for further infrastructure development, financial services provision, consumer demand and increased trade opportunities. UK engagement could open up opportunities for decades to come," said Ratcliffe.