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News & Blog

The China opportunity

Posted: 10th May 2018

A growing number of Scottish companies are benefitting from investing to develop the Chinese market for their products and services: in 2017 there was more than a 40% rise in exports to China compared with the previous year, with annual exports more than double the amount they were a decade ago. There is huge potential for trade between the two countries to increase in the years ahead.

China’s economy continues to grow at a faster pace than Western economies; it has a larger workforce than the USA and Europe combined; and rising living standards mean that hundreds of millions of people are driving huge new demand for goods and services such as food, drink, travel, fitness and leisure. UK customs data shows that shipments of machinery, whisky and food all grew strongly last year, with demand for high-value branded Scottish products led by farmed salmon particularly strong. However it was a surge in North Sea oil-related exports buoyed by a rebounding oil price that accounted for the vast bulk of Scotland’s sales to China.

Exporting activity to the world’s largest and fastest-growing digital consumer market tends to be dominated by a handful of big companies. In recent times however, widespread mobile penetration has made it easier to target Chinese consumers through digital means, thereby opening up the market to smaller companies. The recent establishment by Hainan Airlines of twice-weekly return flights between Edinburgh and Beijing could provide a further spur to investment and trade.

There are also opportunities for Scottish firms to get involved in the huge wave of infrastructure investment resulting from China’s ‘Belt and Road’ initiative. There isn’t an event I go to on China at the moment where this isn’t a hot topic. Belt and Road is regarded as the world’s biggest building project through which China aims to improve its connections to countries around the world, believing it can revitalise international trade by creating a Silk Road for the 21st century. Some estimates have put the total spend of the project at $900 billion, generating huge opportunities for companies throughout the supply chain.

Growing economic activity between Scotland and China isn’t just one way either, as demonstrated from Ctrip’s acquisition of Skyscanner and mobile games developer Skymoons Technology choosing Edinburgh for its first western base. We are also seeing a lot of interest in Scotland from China-based family offices who are keen to hear about investment opportunities here.

When Maclay Murray & Spens joined Dentons last year, we became part of the world’s largest law firm with over 160 offices spread across 70 countries. We wanted to offer our clients with global ambitions of their own high quality advice in all of the places they seek to do business. With over 40 offices in China, we comfortably exceed any other international law firm’s reach into this vast country of more than 1.4 billion people. This matters because rather than being a single market, China is made up  of different economic hubs – not only the major business centres of Beijing, Shanghai, Guangzhou and Shenzhen, but also a number of emerging regional centres, and understanding the regional and cultural differences is important for Scottish businesses looking to enter the market, just as our long-standing presence in Scotland offers the same comfort for Chinese companies looking to invest here.

David McGrory, Edinburgh corporate partner, Dentons

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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