Embattled deal

By Sun Wei in London Source:Global Times Published: 2019/1/23 21:03:40

Chinese firms in UK concerned about how Brexit unfolds

Anti-Brexit campaigner Steve Bray holds a placard as he demonstrates with a megaphone outside the Houses of Parliament in central London on Tuesday. Prime Minister Theresa May will seek further talks with Brussels to try to salvage her Brexit deal, but she was accused of offering nothing new to break the political deadlock just 10 weeks before Britain leaves the EU. Photo: AFP

Beleaguered British Prime Minister Theresa May trying to break out of an impasse created by her defeated Brexit proposal laid out Plan B before parliament on Monday. Lawmakers will vote on January 29 on a series of amendments to decide what kind of Brexit they want to see. 

As Brexit's future is still up in the air, a lot of Chinese companies are worried about the uncertain impact of Brexit on their businesses.  

Catherine McGuinness, policy chair at the City of London Corporation, urged Parliament to work together pragmatically to find a way through the Brexit impasse that removes damaging uncertainty for households, businesses and the sector. 

McGuinness said, "The continuing uncertainty about whether a Brexit deal will be secured means some firms have to continue planning for a no deal departure, even if it means racking up large costs that may ultimately be unnecessary. As a result, businesses have been shifting operations and contracts through expensive, time-consuming and sometimes inefficient processes."

A soft Brexit is favored

Peter Ren, Chairman of the British Chinese Entrepreneur Club, told the Global Times that the impact of Brexit on Chinese companies in the UK is not particularly huge. "The greater impact comes from the fall in value of the British pound. What's more, after the Brexit referendum in 2016, the UK as a whole tends to be more conservative, tightening up work permits, which has a great impact on the work force. Favorable policies toward immigrants and students were also scrapped. 

"I personally would like the UK to stay in the single market, because it is very difficult to shut doors in this globalized world. Of course, I can fully understand those who advocate Brexit. The EU's current policy is increasingly left-leaning, and there is growing bureaucracy. In addition, European integration is going too fast. The new members flock to countries with better welfare like the UK. This is a problem."

Ren organized a survey among Chinese entrepreneurs in the UK before the referendum in 2016. He found that 80 percent of around 150 participants wanted the UK to stay in Europe. There were people who preferred leaving the EU, but unlike the British far-right, Chinese entrepreneurs mainly opposed the EU bureaucracy and high levels of welfare which were "unsustainable."

"It seems not leaving the EU is unlikely, so we hope for a 'soft' Brexit which will be least disruptive, with the UK likely retaining access to the EU Single Market and Customs Union," Ren added.

Thomas Zhang, COO of Aqra Technologies, told the Global Times, "Due to the uncertainties brought by Brexit, our clients are more cautious about investment, which causes uncertainty in my business."

"I feel that the current Brexit process has entered a dead-end, so the best way is to hold a second referendum to unlock the ongoing stalemate," Zhang added. 

Collaboration in context of Brexit

The UK is attractive to Chinese companies with global ambitions. 

According to a recent white paper jointly released by TMF Group and China-Britain Business Council, the UK offers a range of investment opportunities that correspond to China's strategic priorities. This alignment is set to drive further investment and partnerships in sectors like education, healthcare, energy, logistics and transport.

Syrus Lohrasb, CEO of China-Britain Business Fusion and the founder of China-Britain AI Summit, told the Global Times on the sidelines of "Oxford China's Tango with the World Summit" held at the University of Oxford on Saturday that "Brexit has caused a lot of uncertainties and market turmoil, however if we can ensure that we don't end up with a no-deal scenario so that the economy can stabilize in time. A no-deal scenario will severely damage UK's economy and its reputation, particularly in relation to China."

Explaining "how we set ourselves in a post-Brexit era is fundamental," Lohrsab said. "As currently the largest recipient of Chinese investment in the EU, a complex and costly access to the EU can slow down investment in the UK." 

Beijing has already promised to look at the possibility of reaching a good free trade deal with Britain after it leaves the EU, however this must depend on an orderly Brexit agreement with the EU.  

China's Foreign Ministry said last month that China hopes Britain's exit from the European Union can happen in an orderly way and that the bloc will reduce hurdles to Chinese investment and keep its markets open.

"An orderly Brexit can create a bundle of opportunities for the Chinese," Lohrasb added.

Fan Huiyong, chief editor of London-based magazine UK Property Weekly, told the Global Times that 2019 is the crucial year for the UK to eliminate the nearly three-year-long uncertainty caused by the referendum.  

"If the Chinese companies in the UK have a large size of EU business, there will be a lot of uncertainties such as how to trade in the EU, whether additional tariffs, customs procedures or management costs are required, and how to coordinate the travel and benefits between the British and EU employees," Fan said.

However, as long as London figures out the solution, the British government can consolidate UK's advantages in various aspects including a traditional defender of free trade with a liberal economic environment, which attracts investors, according to Fan.  

"Although there are still many concerns among the Chinese companies in the UK, it is believed that the UK can handle the short-term Brexit uncertainties with flexible response. As long as the UK can attract international financial capital and human resources, it can ensure long-term benign development."

Posted in: EUROPE

blog comments powered by Disqus