Inside emerging markets

Stay up-to-date with our RSS feeds

International Trade: Open up!

Published:
5 February, 2010 | 0 comments
China88.jpg

This week, I have attended several meetings in listening mode: hearing from those wiser and longer seeped in China; gleaning some insights; and wondering what it means for me and the task at hand.

My task: I’ve come out to China to work on market access issues – how China opens its market to foreign enterprises and continues to reform its business environment, so that businesses from the UK (and further afield) can operate and trade.

China’s current “five-year” plan describes its commitment to “opening-up,” seeing it as “win-win.” I’m not an economist, but the principle of open markets seems on paper to be exactly that – win-win. For a business, it creates new markets and new potential to boost the bottom-line.

It increases competition and therefore innovation. It expands its customer base, and gives consumers greater choice. It raises the bar for companies going to a market and for indigenous companies challenged by new companies coming in.

A key question for my task is what this all means in China in 2010? This week the commentariat seems concerned, amongst other things, about a rise in trade protectionism. Some of the language is pretty accusatory and heated. The challenge, for policy makers and leaders alike, is not to allow the rhetoric to snowball into real-world impact.

Part of the problem comes when the “creative destruction” of market liberalisation meets economic nationalism. Most economies around the world have taken a beating on the employment-front. In China, leaders and policy makers are trying to keep what I saw described as a “half-developed” economy of 1.3 billion people on the road of growth. It must seem pretty tempting to look for the route that gets you the jobs you need now, and to fight for comparative advantage for the future.

There are real gains for all countries to be made from openness, not just in terms of trade, but also development, if done sensitively, and done right. And, hopefully, for UK companies, continued openness will be new business, and new growth. We need to press the case.

Duncan Buchanan is commercial attaché at UKTI Beijing

Growing opportunities in the Gulf

Published:
18 January, 2010 | 0 comments
gcc88.jpg

The Gulf Cooperation Council (GCC) was formed in 1981 by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

Primarily hydrocarbon driven economies all (possibly except Bahrain) are clearly cash rich and have benefited from the high oil prices in recent years. It is interesting to note that the current price of oil was declared as ‘fair’ by the King of Saudi Arabia, and exceeds the national budget expectations of all GCC states.

The GCC region’s economy tripled in size between 2002 and 2008. The combined nominal GDP of the region grew at the highest ever rate of 33.9% in 2008 to US$1075.98 billion.

The infrastructure spend of member countries of the GCC is expected to grow again in 2010 to around $500bn by 2013, $55 billion of which will be funnelled into road and airport projects within the next 10 years to expand capacity and meet a surge in demand. And this does not include the planned $25bn train that will link the six GCC countries in the region’s first cross-border rail network, the bids for which could be issued in the first quarter of 2010.

So what is driving this need for growth? It is primarily a growing and youthful population with the vast majority being under 25 years of age. Recent surveys suggest that population of GCC will rise from an estimated 39.6 million in 2008 to 53.4 million in 2020 – a 33 per cent increase over 12 years.

With this comes the need for more schools, universities, hospitals, roads and airports. Power and water projects in GCC nations are largely carried out by quasi-government entities, and these projects are seen as a high priority, as the additional capacity is urgently required to address demands of the region’s growing population. Annual GCC electricity demand is expected to grow annually by 10 percent, and desalination demand 8% annually, until 2015.

UK firms will be well advised not to focus on the bright headlight, the glittering prize, in the first instance but should start at a manageable pace, feeding into the supply chains of ‘local’ prime contractors and become known as a ‘local’ supplier.

Just one word of caution – the cost and time implications in developing a profitable business in GCC will almost certainly be way higher than you expect. Predict double your calculations to be safe!

Phil Dowrick is a specialist in the Middle East at UKTI

Making sense in Mandarin

Published:
7 December, 2009 | 0 comments

I can relax for a bit. I’ve just given my fourth speech in Mandarin in as many days. I now have 20 minutes downtime before I attend a press conference. Time for a blog.

On Tuesday, I opened an advanced engineering and financial services seminar in the provincial capital of Shandong Province, Jinan. On Wednesday, I spoke before assembled shoppers at the opening of a new Byford outlet in Beijing’s premier shopping district, Wangfujing. On Thursday, I was back in Wangfujing to celebrate Wedgwood’s 250th Anniversary.

It takes me several hours to practice a long speech in Mandarin. Practice is most effective if I spread it over several days. At present, I am spending an hour from 7:15 to 8:15 each morning with my teacher, Ms Zhang, trying to perfect delivery of the next speech. We got it right with Wedgwood. I was more relaxed than usual and the speech sounded smooth and natural. At the Byford event I was somewhat tongue-tied. My text was too long, and I tried to shorten it as I was speaking. Another speech was not too bad, but I slipped up several times: once, when I was distracted by a photographer, a second time when I used Japanese pronunciation for a word.

I started to learn Mandarin when I arrived in China three years ago, aged 48. I learned Chinese through Japanese, in which I am relatively fluent. Knowing Japanese helped enormously with the characters and vocabulary, but not much with pronunciation and not at all with Mandarin’s four tones. I will never speak Chinese like a native speaker, though I continue to improve. The key thing is that I make sense. This is worth all the time and money I devote to learning and practice. It will, though, take more time before I trust myself to give a press conference without interpretation.

Alastair Morgan is director of Trade & Investment for China

UKTI: Visit to China

Published:
19 November, 2009 | 0 comments
China100_1_.jpg

Chinese infrastructure efficiency hits me as I arrived at Shanghai’s Pudong airport. The BA flight was over an hour late, so I had 20 minutes to get through quarantine and immigration, to change terminal, check in, go through security and find the right gate. At Heathrow this would have taken two hours minimum. The officials were helpful, the system worked, the new China.

It took me back to my first visit to China in 1979. Just three years after the end of the Cultural Revolution, I found myself the secretary of an agricultural trade delegation. To get to China we went via Anchorage and Tokyo in a journey taking over 36 hours. The chaos remained; it was a society and an economy reeling from a collective loss of reality. Officialdom was everywhere and paramount. I did the classic thing of leaving my wash-bag in Beijing and being given it back by the police in Nanjing. I had one heart-breaking talk with the director of a scientific institute, a learned but broken man, recently released from hard labour in the north. In Shanghai, I broke away from my minders, wandered the city and ended up on the Bund, mobbed by a crowd, not selling fake Montblanc pens as now, but desperate to talk to a foreigner.

This time, I am doing a tour of five cities. Three of them are twinned with a UK city (including Leicester, Liverpool and Coventry) The municipality of Chongqing, my first post of call, claims a population of 32 million, half of the whole of the UK! The statistics in China boggle the imagination.

The Chinese now have the energy and self-belief that the British had in the mid-nineteenth century and the Americans had in the mid-twentieth. Great nations used to express their superiority by conquest, exploration, trade and art. Now trade, with international politics is pre-eminent. We all know China’s potential. But how will it respond to global responsibility, global competition and the perils of instability? Back in 1979, it looked inward and backward, guided by a shifting dogma, now it is global and reaching out. I vote for its airport infrastructure anyway.

Andrew Cahn is chief executive, UKTI

UKTI: The lure of Nigeria

Published:
12 November, 2009 | 0 comments
Oil_picture100.jpg

When I mention I’m based in Nigeria, I often get a knowing incline of the head and something resembling a sympathetic frown – occasionally both at the same time, accompanied by a sucking-in of air. It feels like I’m the bereaved. I say I’m here by choice. I don’t think they believe me.

It all boils down to perception versus reality. When many business people think of Nigeria, they immediately think poor infrastructure, limited power, security and crime issues. However, the reality is very different. British companies with a pioneering spirit are doing well. For them, Nigeria is one of Africa’s best-kept secrets and they want to keep it that way.

The most populous country in Africa, with a population of 149m, Nigeria is tipped to become the world’s sixth largest country by 2050, with 289m people. Lagos alone has a population of 15m and is growing 10 times faster than New York and Los Angeles. And Lagos currently contributes 32pc of Nigeria’s GDP. It will be hard to ignore.

The opportunities for British business extend well beyond oil and gas to infrastructure, ICT, healthcare, agriculture and financial services. This week I met a guy from a British company that has decided to set up in Nigeria. It is small and provides niche training, but is already working with one of the oil majors. He was amazed to hear of the opportunities on offer and we are now working together to try to open a few more doors.

Having been here for a few months, I can say there is nothing more rewarding than exploring new opportunities for UK companies and then helping make them happen.

Andy Davison is deputy director of trade in Nigeria for UKTI

RSS feeds: Blog posts, Blog comments

Back to top →