Li Keqiang In The U.K. – Selling Or Buying?

  • Li Keqiang

Li Keqiang In The U.K. – Selling Or Buying?

Chinese Premier Li Keqiang has just wrapped up his visit to the U.K., during which many business deals were confirmed (or re-confirmed). Many of the deals were positioned as China investing in, buying into the U.K. But in some ways it was just as much about selling, selling the world-leading capabilities of the world-scale companies that some Chinese companies have developed on the back of China’s infrastructure boom over the last 20 years.

Several of these highly successful industries are facing a dilemma. They have become successful solely on the back of tremendous domestic growth. Indeed, the China market that they dominate has represented the majority of the total global market in recent years, for example, in power stations (coal or nuclear), high speed rail, city subway systems and more. But these markets in China are no longer growing at double-digit rates, and a decline in absolute market size in China is foreseeable. The only way to sustain their performance is to sell internationally.

And here Chinese companies face a challenge – their companies are not well known, they have very limited track record internationally. Consequently, government officials on international visits have a big role to play as “salesperson in chief”, lining up a package of not just the industrial companies but also the finance to go with it.

I was able to attend some of the events that were part of the visit, in particular the China Britain Business Council dinner at the Natural History Museum. Premier Li impressed with his ability to adapt his remarks to the venue and to speak without reference to notes, to the extent that the interpreters had a tough time keeping up. In his remarks in response, the UK Chancellor George Osborne told the story of how his mother had studied and spoken Chinese, visiting China in the 1970s.

Expect to see much more aggressive support from China’s political leaders of China’s infrastructure industries as they seek to expand internationally. This is realistically the only way in which they can remain at the scale they have only recently achieved. As an early adopter, perhaps the U.K. got a good deal.

You can read more of my views on China on my LinkedIn Influencer blog. And please follow me on Twitter @gordonorr

Image credit: Propeller TV

By |June 20, 2014|Categories: Gordon's View|0 Comments

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