As China starts to wind down and prepare for New Year we thought it might be useful to reflect on the last year and some of the work we have done with China and to speculate on how the year ahead post Brexit might pan out.
Over the last year we have helped over 82 companies in their dealings with China. The majority of those have been looking to import from China to UK but a sizeable proportion (20%) have been looking to export to China. In addition we have helped a number of companies who have a presence in China to resolve issues, expand their base in China or to establish a new base in China, typically by way of a WFOE.
Industry sectors we have helped are wide and include construction, advanced engineering, plant and machinery, food produce, homewares, clothing and fabrics. Electrical products, health and beauty products, cars and bikes, and leisure products.
Looking to the New Year we are seeing a number of trends suggesting change. We have been encouraged by the increase in UK companies who have contacted us who, faced with the realities of Brexit are looking to expand into new markets and have China firmly in their sights. We have at the same time also been contacted by clients looking to move away from their traditional reliance on European suppliers and in view of the on going uncertainty over Brexit are looking to new markets to source their supplies.
There is no doubt that Brexit will continue to dominate businesses decision making over the next year and probably beyond. It certainly won’t stop on March 29th – that is just the beginning. Companies are looking to China as their chosen destination for a number of reasons. The country offers stability of trade (trade will be totally un affected by Brexit (unless we agree a trade deal with China – which will only improve things further). The shipping routes for delivery of goods are well defined, reliable and will be un affected by Brexit. China now has a sophisticated and advanced manufacturing capability, (this is the country which has just landed a rover on the dark side of the moon). In addition China has experienced a slowdown in it’s economy, a situation it is keen to reverse by increasing trade overseas (good news for UK importers) and though internal stimulus to it’s economy (god news for exporters to China). This situation is exacerbated by on going trade disputes between China and the USA. The pound is currently trading at record low levels, probably not a situation which will last but offers exporters a real bonus trying to establish themselves in this huge but very competitive market.
Other development which is starting to influence trade is China’s successful building of the new belt and road initiative which has seen direct rail freight services between China and the UK, which offer an alternative to traditional air and sea routes. The real possibility of closer trade ties between the UK and China post Brexit offers the prospect of further advantages in the near future.
It’s perhaps not surprising that many UK companies are looking to the worlds second biggest economy to do business in the year of the Pig.