Businesses get mixed messages from China – CBI

CHINA represents a massive opportunity for British companies to develop their exports, the CBI’s top man in Beijing told West Midlands business leaders.

However, the Chinese government has to clarify its trading policy or risk alienating foreign investors, Guy Dru Drury told a meeting of senior executives at a CBI West Midlands’ lunch yesterday.

Addressing the meeting, held at the new Q3 Academy in Great Barr, he said the current Hu-Wen leadership had provided a stable platform for growth which had benefited many foreign companies.

However, of late, the direction of China’s economic and foreign policies were beginning to cause concern among businesses.

Mr Drury said there had been a shift in China’s powerbase due to its rapid economic growth and while this was not leading to sabre-rattling, it was undoubtedly being used by the administration to flex its muscles on the global stage.

“The ship of state has been blown off course of late. We have had China backing North Korea and falling out with Japan over disputed islands in the South China Seas,” he said.

“It is also acting like a juggernaut and not backing down in the face of criticism over its currency.

“However, I think this show of strength is actually its weakness. The business environment is receiving mixed messages and as a result, businesses are confused about what the future holds.”

He said this was borne out by a recent survey by the British Chambers of Commerce which had concluded that the vast majority of UK companies were put off doing from doing business in China because of the bureaucracy involved.

Nevertheless, many firms were prepared to risk disruption because of the long term rewards of offer.

Well over half (59%) of the firms surveyed have said they will continue to invest in R&D products for the next two years because of the needs within the domestic economy.

Mr Drury said many Chinese firms were now taking innovation seriously and were looking to improve their position in the global technology community.

“Many firms have recognised there are opportunities to learn from Western companies and the CBI is telling the Government there that the best way forward is to embrace indigenous innovation.

“This in turn will continue to provide opportunities for Western companies ,” he said.