GUEST BLOG: Business after Brexit – Is our future with China?

October 5, 2018

By Amy Hodgetts, Oasys Software

With 29th March 2019 drawing closer, and without a clear understanding of what state the market will be in between Britain and the European Union after Brexit, the pressure is certainly rising.

Despite this worry, or perhaps because of it, less than one third of UK firms say they have a plan in place in the event of a no-deal Brexit.

Though a no-deal Brexit would be a problematic event, it would also unshackle the UK and allow it to make trade deals across the world. 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 would China be open to the idea of a trade deal with the UK? 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.

This initiative would see China gain far stronger transport and trade routes throughout the world. 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.

A contrast of confidence has, however, been outlines by 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.

As the UK’s trade ties with China develop, however, these opinions may change. 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.

After an outbreak of “mad cow disease”, the EU placed a worldwide ban on the export of UK beef. 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 other British produce does China want? What markets and UK businesses could, potentially, fare well with Chinese consumers? According the Telegraph, top British exports the Chinese enjoy are:

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

Of course, China’s market is massive, and the competition is there, but that shouldn’t put off smaller companies from breaking into the market. 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.

After a Chinese model shared her purchase of a Tangle Teezer to her social media followers, Tangle Teezer took off in the country. China loves its online shopping, so influencers should not be overlooked when planning to cater to the Chinese market.

Businesses can potentially do very well in China, with the right product and approach. 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.

The Business Magazine has offered a guide on how to approach your business dealings in China. 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.

The business world is going to change for the UK very soon. 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?