UK finds source of investor support in China

Updated: 2012-08-14 00:19

By Zhang Haizhou in Birmingham (China Daily)

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When Martin Uhlarik told a colleague he was about to join SAIC early this year, the first question he was asked was: "What is that?"

But the doubts from others did not make the 41-year-old car designer change his mind, as he believes SAIC Motor Corp Ltd will soon be "a major player" in the car industry.

"That’s very obvious. People don’t know what SAIC is yet. But they will," Uhlarik said.

SAIC is now the owner of MG, a British car brand started in 1924.

SAIC bought MG Rover in July 2005 and in August 2008 began the small-scale assembly of limited-edition MGs from Chinese-made kits at Longbridge, a part of Birmingham.

The company introduced its first car in the United Kingdom in April 2011. The MG6 was also the first all-new MG in 16 years.

MG’s rebirth under SAIC means fresh opportunities for Uhlarik, who used to work as a designer for international brands including Volkswagen, Nissan and Skoda.

"MG is kind of enjoying a renaissance, a rebirth. It’s not every day that a designer gets a chance to be part of that. Not many brands are being reborn with such a big investment," said Uhlarik, who is now SAIC’s UK design director.

Increased investment from China in recent years is now all the more important for Birmingham and the rest of the UK.

The UK is now home to more than 400 companies from the Chinese mainland, according to the government department UK Trade and Investment.

Chinese investment in the UK has increased from almost nothing in the 1970s to more than $2.3 billion last year, according to Liu Xiaoming, Chinese ambassador to the UK.

SAIC is not the only large Chinese investor in Birmingham. The UK’s second-largest city has also attracted investment from NVC Lighting Technology Corp, China’s largest lighting company, from Guangdong province.

Chinese businesses have invested in 24 projects in the Birmingham area, creating 711 jobs and safeguarding 78, according to figures provided by the investment program Business Birmingham.

NVC, which has invested 15 million pounds ($23 million) in the region so far, is expected to create 250 new jobs by 2015.

"We certainly see that in the near future that China will become a very large source of investment in the UK and certainly into the city because we demonstrate successful investments like SAIC and NVC," said Marek Dobrowolski, investment manager of Business Birmingham.

"We are being ‘proactive’ on engaging with China," he said.

Dobrowolski added that Business Birmingham, which seeks to attract inward investment into the city, is in discussions with around 160 potential international investors, around one in 10 of which are from China.

He noted that Chinese companies will have more investment opportunities as the city prepares to make improvements to its infrastructure over the next five years, including building a high-speed rail link between Birmingham and London.

The UK government plans to invest 200 billion pounds ($312 billion) to develop the country’s infrastructure over the next five years.

Hopes of persuading the private sector and overseas investors to help rebuild Britain’s aging infrastructure have received encouraging signs from China Investment Corp, China’s sovereign wealth fund.

Lou Jiwei, chairman of the fund, said in an article in the Financial Times late last year that the CIC "is keen to team up with fund managers or participate through a public-private partnership in the UK infrastructure sector as an equity investor".

But Fu Xiaolan, an expert on Chinese overseas investment at Oxford University, said that Chinese companies would have to improve its communication with the British public before embarking on investment in the nation’s infrastructure.

"(Chinese companies need to) let the British people know that infrastructure is just part of China’s investment abroad and there’s no strategic goal," Fu said.

Her concern is not groundless considering Huawei Technologies Co Ltd’s failed effort to provide mobile phone signals in London earlier last year.

The telecommunications solutions provider was reported in February 2011 to have made an offer to provide telecom equipment as part of a partnership with UK mobile phone operators.

But the British government rejected the offer, which was worth up to 50 million pounds, over "spying fears", because Ren Zhengfei, founder and CEO of Huawei, was formerly an officer in the People’s Liberation Army.

But Fu said investing in the UK’s infrastructure "is a good choice" for Chinese firms.

"There are opportunities because the UK’s austerity and public spending cuts have left a big financial gap in this area," she said, adding investing in infrastructure is a "safe and stable" choice.

In order to attract more Chinese investors, major British airports have begun a series of renovation projects.

Birmingham International Airport is now extending its runway in order to accommodate direct flights from China.

Paul Kehoe, the airport’s chief executive director, said that discussions had been held with "three or four Chinese airlines", but no agreements had been reached so far.

He expressed his hope that the airport could "connect with Shanghai and Beijing", while also mentioning Guangzhou, Birmingham’s sister city, and Chongqing, China’s most populous city.

In February, Colin Matthews, chief executive of the British Airports Authority, warned that capacity constraints were "damaging the UK economy when the country can least afford it" after the number of passengers flying between the UK and China fell for a fourth consecutive month.

London’s Heathrow Airport is full to capacity and cannot take on new routes. Its traffic to China dropped 0.7 percent year-on-year in January.

"Business leaders in the world’s fastest-growing economies say they are put off investing in the UK because of a lack of direct flights," said Matthews.

A month later, Hong Kong Airlines launched its first-ever service between Hong Kong and London’s Gatwick Airport. Air China also launched direct flights between Beijing and Gatwick in May.

In early July, Manchester Airports Group unveiled a 650 million pound plan to develop the UK’s first "Airport City".

Since the launch of Airport City in January, interest from China and the rest of East Asia has been strong and Manchester Airports Group is aiming to build on this early interest with the creation of a 32-page Mandarin Chinese promotional document, detailing the 465,000 square meter Airport City scheme.

Airport City will also improve the viability of new direct passenger services between northwestern England and China.

"Airport City has the potential to act as a catalyst and serve as a magnet to Manchester, not just for Chinese and Far Eastern businesses looking to enter the UK and European markets, but also to airlines to operate direct passenger services between the north of England and China," said John Atkins MAG’s airport city director.

zhanghaizhou@chinadaily.com.cn