Chinese companies and investors are coming to the UK, hinting we could be on the verge of a golden era of collaboration between the two powers and the annual Sino British Summit highlights these possibilities.
Chinese-owned companies in Britain have enjoyed triple-digit growths in 2016, according to a research by accountancy giant Grant Thornton.
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Of them, the best-performing 30 companies grew their revenues by some 174% in 2015 and registered a combined turnover of £9.8 billion and create as many as 20,000 jobs in the UK.
As the UK prepares to leave the European Union a year’s time, the UK is on the look out for international trading partners — and China is firm favourite.
With a view to encouraging a stronger relationship between the UK and China, London hosted the Sino British Summit this month, a two-day event that aimed to boost cooperation with Beijing.
The summit saw Chinese and British industry leaders discuss potential venture opportunities and evaluate how to further the strengthen the relationship between the two countries.
Technology was the overarching theme of the event which looked at its effect on finance, retail, politics, education, and lifestyles.
The founder of the summit is Ryan Li, a 20-year-old entrepreneur whose goal is to build cross-cultural understanding between the UK and China, believes there’s a lot these two countries could learn from each other.
Verdict spoke to Li in the run up to the Sino British Summit.
Sino British Summit: Chinese Fintech companies considering UK and EU markets
Li expects that Chinese fintech could find particularly fertile soil in the UK.
He said that China’s increasingly tech-savvy population, combined with a strong focus in the fintech market and in digital payments as well as a tendency to use one app — Alibaba — has allowed the country to built a florid, functioning technology ecosystem.
Out of the 27 fintech startups with valuations exceeding $1 billion in the world — so-called unicorns — nine are Chinese.
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In order for these companies to obtain an initial public offering (IPO) and land international markets, they have to go abroad and the US has been strong critics of the Chine technological improvement. We saw Alibaba’s products being blacklisted in the US.
With the EU and UK acting an equally leading role in the fintech market, Li explained, China will be eyeing deals with either of them as soon as Brexit takes place.
I think that Chinese firms are waiting to see what’s the outcome of the separation between these two. Both British prime minister Theresa May and the EU are hungry for flow in of Chinese investments and expansion but I don’t think the decision will be made that swiftly.
The EU and the UK will be competing to secure China’s presence in their fintech markets.
China will equally need to collaborate with the Western world some day. The markets in China need to be more regulated and the UK has one of the largest fintech markets outside China.
It has a fully regulated system and that’s something we should learn from the UK.
Sino British Summit: Amazon and Alibaba have a lot to learn from one another
British and Chinese business have a lot to learn from one another when it comes to digital retail and ecommerce.
In the past few years Amazon in the US and Alibaba in China have come to dominate online spending.
Though Amazon has expanded into China, Li said it is struggling to compete with Alibaba:
What makes Alibaba so special in China is that it can coexist with the ecosystem that created around ecommerce.
Throughout the years, Alibaba expanded into the digital payments sector and set up Alipay (or Ant Financial), which is beginning to gain a foothold in Europe.
Ant Financial’s influence in China is much greater than Amazon’s. Some 79% of the payment system in China annually is now done digitally, half of which through mobile phones, ranging from WeChat Play and Alipay.
Alibaba is already well into an ecosystem that watches 1.3 billion people, whereas Amazon, although it has a bigger market share and is wealthier, is only focused on commerce and retail.
Li believes Amazon could learn a lot from Alibaba, whose influence in the West is increasing.
We have seen Alibaba investing in cars, renewable energy, and filming, these are the areas outside ecommerce that can perhaps coexist with Amazon in the Western world.
Yet, right now the two would struggle to operate in the same markets, according to Li. The differences in lifestyle and mentality between the UK and China make it hard for them to grow in foreign markets.
In the UK, you go to shops to feel the equipment, the texture of products, and that’s the Western approach, whereas in China we want the most efficient way.
In this case, I don’t think Amazon and Alibaba could coexist on the ecommerce side.
However, Li expects the two companies will take inspiration from each other, potentially changing the retail landscape drastically in as little as five years.
Amazon could use a platform built by Alibaba to get into the Chinese market more heavily.
Alibaba could use the storage space, the global influence that Amazon has in the Western world. It could collaborate by adding discounts to payments made by one another.
Sino British Summit: Digital investment means China can now do quality
Digital investment has allowed Chinese retailers to begin sending higher quality products in Europe and US — opening up the lucrative luxury market to China’s producers.
We’re seeing more and more fashion brands use textures coming from local Chinese provinces and combine with British design. There is a lot of Western interest in how to put together a 5000-year-old culture with modern Western technologies, how do they fit into the society.
The rise of the digital sphere and technology improvement is, therefore, allowing China to be better at distributing information regarding our products to the Western market. The flow of information has been reversed, people are starting to know that China has good quality products.