One group of British businesses is sure to do well from what is billed as a “Second Wave” of Chinese expansion into the UK: florists. The opening of an engineering research centre in Nottingham by Changan Automobile, one of Chinas largest carmakers, featured as many cut flowers as an operatic opening night.
The ribbon-cutting ceremony a fortnight ago celebrated the opening of an outpost that Changan hopes will help it move up the value chain by assimilating western technology.
Liu Bo, assistant president of Changan, said: “This centre will enable us to optimise engine and transmission technology. We expect to have 200 employees here by 2014, most of them local.”
The scale of the investment by Changan – ￡20m-￡30m over five years – is modest when compared with the numbers that describe the investor. Mr Liu said the Chongqing-based company would make 2m runabouts in China this year, rising to 4.5m in 2015. A staff of 40,000 at nine production centres would generate turnover of about Rmb100bn (￡10bn) this year, he predicted.
However, such events as the Nottingham opening are in their small way landmarks in the fraught history of east-west trade relations, if lacking the high drama of the arrival of Commodore Perrys frigate in Tokyo Bay in 1853.
Chinese companies, still seen by many westerners as anonymous producers of low-grade commodity goods, have begun to set up outposts in developed markets with two aims: to build international brands of their own and to download the currently superior western technology they need to remain competitive.
Initial Chinese excursions into UK business, according to Kevin Lin, owner of KL Communications, a translation agency, consisted of establishing representative offices and making opportunistic takeovers. These included the purchase by Nanjing Automotive of assets of defunct carmaker MG Rover in 2005.
“Through my work I know that the Chinese government is preparing a second wave,” he says. “And this will be much better prepared and planned.”
According to Mr Lin, a seasoned diplomatic translator, the strategies of the big state-owned corporations that dominate the Chinese industrial landscape are largely determined by government bodies such as the State-Owned Assets Supervision and Administration Committee.
Min Rose, proprietor of the East Midlands China Business Bureau, who helped the East Midlands Development Agency bring Changan to Nottingham, says: “Improvements in Chinese labour laws mean that Chinese costs are less competitive than those in Cambodia or Vietnam. So the government realises that relying on low-cost manufacturing is unsustainable.”
That explains the focus of Chinese companies on investments that improve their skills. Last month, MG UK, the successor business to MG Rover that belongs to Shanghai Automotive following its merger with Nanjing Automotive, opened a design centre at its Birmingham headquarters.
Its job is to assimilate European car styling trends and apply them to Saics models. The unit is adjacent to a technical centre that, in spite of the companys slim UK output of MG TF sports cars, employs 300 engineers.
Saic is investing ￡5m in facilities at Longbridge that include a new engine testing operation.
Similarly, Dynex Semiconductor of Lincolnshire, ultimately owned by China South Locomotive & Rolling Stock Corporation, is preparing to open a new R&D centre specialising in chips for the power industry.
Brand-building in the west by Chinese companies is at a tentative stage. But Chinese company bosses, present in unprecedented numbers at Birminghams huge Spring Fair homewares exhibition this year, are keen to win the same name recognition accorded to such Japanese businesses as Toyota and Toshiba.