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Firms seeking new trade deals

Could China be a key post-Brexit trade partner?

China offers opportunities to trade


It’s hard to remember a time when Brexit didn’t dominate the news headlines. And yet, despite the saturation coverage when it comes to the UK’s departure from the EU on 29 March, many businesses still feel in the dark and unable to prepare. One survey showed that less than a third of UK businesses have a no-deal contingency plan in place.

A no-deal Brexit is less than ideal, but the silver lining would be the freedom to make trade deals worldwide. It would not affect trade with countries outside the European Union, which is precisely what the UK seems to be planning for with its Prime Minister having recently visited China for talks. But is China as interested as the UK in a trade deal? After all, in 2016, the UK imported £42.3bn worth of goods from China, but exported only £16.8bn to China in return. But then again, that’s not entirely proof that China wouldn’t increase its British exports demand if a trade deal was in place — the country is already hoping to widen its trade with The Belt and Road Initiative.

China, and indeed the rest of Asia, would be able to forge trade routes across the globe through the use of The Belt and Road Initiative. The “belt” side of it roughly equates to the land connections it will build through railroads, and the “road” refers to a sea-route of trade. Essentially, China is building a new Silk Road, and 71 countries are already part of the project, including Russia and New Zealand.

There isn’t a sense of unanimous support behind the initiative, says Business Insider UK. Where Prime Minster Theresa May has not pledged support to the project that she feels isn’t a guaranteed success, Chancellor Phillip Hammond expressed his support of it. This could, of course, change as the UK’s relationship with China evolves. In fact, we have already enjoyed success in China before Brexit has even resolved. At the start of 2018, during talks between the UK and China, the 20-year ban on British beef was lifted. The deal is purported to be worth £9bn to the UK.

In 1996, the EU placed a worldwide ban for the exports of British beef amid concerns over “mad cow disease”. It wasn’t until 2006 that the EU lifted the ban, but other countries chose to retain their ban on the product, including China.

What items are popular in China that the UK could provide? What markets and UK businesses could, potentially, fare well with Chinese consumers? According to the Telegraph, top British exports the Chinese enjoy are:

  • British cars
  • Scottish salmon
  • Burberry, and other designer labels
  • Scotch whisky

It’s not just big brands that can break into the Chinese market either. The Creative Industries reported on the success of hairbrush and haircare brand Tangle Teezer over in China. Tangle Teezer’s International Managing Director, Gemma Clarke, confirmed in the article that China became its second biggest sales market in only 3 years trading there. The success is attributed to a Tangle Teezer product being bought by a Chinese model, whose social media influence saw the brand being highlighted to her many followers. China loves its online shopping, so influencers should not be overlooked when planning to cater to the Chinese market.

A combination of the right product and the right approach can see any business do well in the Chinese market. At the very least, firms need to plan for the eventual shake-up to the UK’s ties with the European market once Brexit comes into play, and time is running out to start building the foundations. This small window of golden opportunity has been highlighted by Rebecca De Cicco in regards to the UK’s construction industry in particular. The director of Digital Node outlined how 70% of buildings over 200 metres tall completed in 2017 were built in China, and so the country is increasingly interested in building information management software and crowd simulation.

The use of British construction software has already proved its value to the Chinese construction sector in Beijing’s new airport, the Beijing Daxing International. Projected to see 45 million passengers a year, the airport’s construction has benefited from crowd simulation software provided by UK structure design software experts, Oasys. The software alerted the construction company and designers to any potential bottlenecks, congestion problems, or other inefficiencies.

It’s all about the approach, says the Business Magazine. As with any overseas market, the magazine advises companies to consider the culture of the country they are trading with; in this case, explore China’s culture. The general consensus is to be aware that what works in the UK may not work in China’s business ground, and as relationships can take a long time to build, jeopardising them with an ill-placed comment or miscommunication can slow that pace even further.

Businesses can’t afford to be unprepared for Brexit. Whether or not we retain trade deals with the EU, and to what to degree, the wider world is coming to the UK. Will it be a great opportunity for businesses, as some predict?




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