In 2018, the Forum themed “Shifting opportunities and Emerging Challenges” was co-organised by the LSESU China Development Society and KPMG, and sponsored by Foremost 4 Media and Entrepreneurs Global. The Forum attracted 12 prominent speakers and business leaders, over 100 students from leading universities and 40 professional audiences.
Mr Jackson pointed out the steadily strengthening UK-China relationship by comparing the business environment 12 years ago with today, where there was only one Chinese manager at KPMG’s London office in 2006, yet now there is a dedicated team of Chinese managers and partners leading the business in the UK.
He emphasised KPMG’s role in actively helping Chinese investors break into the UK market and facilitate bilateral trade deals: In 2016 KPMG advised 10 of the 20 top Chinese outbound investment deals, and 3 out of 5 of the largest M&A outbound deals from China.
He also expressed optimism in the UK side around the China-UK relationship during the post-Brexit period, and raised hopes of agreements signed for the UK government to partake in the Belt and Road initiative.
KEYNOTE SPEECH 1: Where Next For China’s Outbound Investment
Chinese M&A this year had been hit by government intervention and tight regulatory regime on Chinese investment around the world, the US especially. But tariffs do not do actual harm to Chinese firms because companies such as Haier already have significant manufacturing presence within the US. The Chinese government had intervened in companies’ decision to invest overseas because it wants to reduce risks within and without China. But this has not hampered most Chinese firms’ overseas expansion for example in the Last Vegas Consumer Electronic Show that just concluded, one third of participating companies were Chinese.
Collaboration between Chinese and Silicon Valley start-ups is continuing, and on the more matured side, Chinese investments bring in much needed investments. China these year will also shift to more strategic assets with a sustained emphasis on acquiring IP for example the collaboration between COMAC and Boeing in the aviation industry. All activities should align with the Made in China 2025 plan.
Gordon mentioned a few sectors that will be dominated by China, for example in the manufacturing of Internet of Things and E-sports.
Brexit is not changing much for Chinese investments other than making it much cheaper, because of Britain’s skilled workforce that is used to working with foreigners. Outside of the limelight, Chinese companies are collaborating closely with British firms on technology and this should be encouraged by the UK government. The UK has been moving in the right direction when we see Chinese companies acquiring F1 and aviation technology in the UK. Not all investments by Chinese companies into UK have gone to plan but greater preparation now mean that history is less likely to repeat. Most importantly, a lot of the investments into UK are going to be invisible a case in point is Chinese companies setting up offices in Manchester and Nottingham to work with university spin-offs.
Gordon concluded that Chinese companies will see a rebound of M&A activities this year but also witness more organic growth that target companies with more aligned operations, and at the same time invest less in the US and more in the UK.
KEYNOTE SPEECH 2: The Belt and ROAD Initiative
The Belt and Road initiative can be traced back to 50 years ago when China gave Pakistan a loan to build a road, and Pakistan remains an essential partner today under the BRI. Of the $900bn China plans to invest, $60bn will go to Pakistan, underlying the fact that this is a critical component of the BRI. The geography of Pakistan determines that oil that China consumes can go to Kashgar in Western China directly through Pakistan, which brings enormous cost savings in cutting 28,000km off the journey. Therefore the first investments will focus on the energy sector which acts as the basis for every other sector for the Chinese economy.
From 2023 onward, there will be a high-speed rail stretching from the Southern city of Kunming down to Indonesia. With manufacturing costs going up, China will gain a lot from the opening of the rail, since it allows for exploiting the relatively cheap labour found in the Indochina countries. For the Road part of the Belt and Road initiative, the Trans-Siberian rail is not well loved, as the Chinese could either choose to go north or south by rail.
The arctic corridor will also save a huge amount of travelling time, so it is wise to plan for the next 25 years ahead. As part of its strategy, China is buying a port in Kirkenes at the top of Norway to well place itself in fully exploiting the opportunity. By utilising transport over the Arctic, the world will benefit from a more efficient transport system, and the locals will embrace increasing economic opportunities. The mutual benefits are enormous.
Other important aspects of the BRI include the railroads built by Chinese in Africa which links the countries of East Africa together , and the announced three blue-seas passages. The BRI is a much bigger project than what was initially announced, as Beijing says, BRI is not just about countries, it’s about real business. China’s sound capital foundation and the efficient logistic system would facilitate the smooth progress of the BRI in the coming years.
PANEL 1 : ENTREPRENEURSHIP OPPORTUNITIES AND CHALLENGES
As the name of this panel indicates, the business world is all about seizing opportunities, just as Mr Gao said philosoph- ically: ‘All threats can become opportunities.’ Mr Gao went on to express his optimistic view for the UK market after Brexit, pointing out that the reduced sterling exchange rate attracted more international students, this provides an increased flow of talents.
Mr Cao agreed with Mr Gao, he believes that the real challenge is not brought by Brexit but by the technological advancement and the rise of the East. Another challenge discussed in this panel is regulatory problems, in particular, the General Data ProtecJon Regulation(GDPR). Since its introducJon in April 2016, the GDPR has been seen as a barrier for startups to enter the market. But Mr Cao and Mr Zhang see it differently. While they think that data protection is a global trend and that any regulation is indeed an added cost to businesses, GDPR does provide protection for businesses over the information they own. Specifically, Susan mentioned new technological infrastructure in Google under the new regulation that promots fairer competition.
As to the opportunities, the panel highlighted the momentum of growth in the technology industry, and how the big companies are taking a leading role in fostering this growth, creating more opportunities where start-ups can operate. When the speakers talk about their individual experience, Sandhu told the audience to choose the work they like and not to be afraid of making changes, for he resigned from his Goldman Sachs job to concentrate on the Market Mogul.
During the panel, Mr Gao also presented his business philosophy, as he emphasised credibility, talent, culture and making the best product for a new business, and he explained why he believes localisation and globalisation are the key strategies to expanding market share.
The first panel focused on how businesses can survive and thrive in the UK, the impact of a series of newly implemented regulaJons, and the effects that the major challenges such as Brexit may have on business start-‐ups. Beside these pressing issues, the panelists also shared their personal experience as entrepreneurs and the business philosophy they’ve acquired during their career.
PANEL 2 : How is china winning the tech race
Technology has become more and more “built in” in today’s society, and regional differences in progress of technology development and speed of adaptation have naturally led to an unspoken “tech race” between economies. LSE alumnus Mr Mu kick-started the panel by recognising the intensity of technological growth in China and acknowledging the advancement of Chinese firms in pooling market-related data and analysing them using artificial intelligence.
Mr Zhang further enriched the discussion by stressing that the size of the Chinese financial sector is a natural home market for many Chinese firms that focus heavily on information collection and analysis. However, he also expressed concerns regarding the differences in matters such as labour laws and data protection between the UK and China, which he believed was an important obstacle that Chinese firms must overcome to operate successfully in the UK. In terms of the “tech race”, Professor Xiong analysed the “multiplier effect” of innovation in China. He highlighted the reality that because of the large population and market, a seemingly insignificant innovation can lead to proportionally much larger reward.
By exploiting this advantage, Chinese firms can apply AI to data that are directly collected from the population, not from other sources, and this acts as a screening device for their business development. Professor Xiong then went on to discuss a “win-win” model for companies entering the Chinese and the British market; that is to work with local companies and find a collaborative strategy, rather than to create direct competition. However, it is true that in many markets, like business start-ups, the current state is approaching saturation and competition has been intensifying for years.
Though there was no conclusive answers as to the result of the tech race, it was clear that the panellists were optimistic about the future of China-Britain business collaborations, which they believed could be further developed by exploring the comparative advantages in different business environments
At the end, Mr Mu shared some of his personal experiences as an entrepreneur, and discussed important market entre strategies and tips. Marketing has always been an important factor, yet in the tech era, traditional forms of marketing are in decline. It is important to focus on AI-driven marketing, and “word of mouth”, as such strategies bring about creativity and individuality in the business world.