Xi visit a game-changer in Sino-UK ties

Agreements point to modernization and internationalization of Chinese industry

While President Xi Jinping's recent high-profile visit to the United Kingdom will surely be remembered for a long time, it is the ensuing commercial agreements that will serve as tangible evidence of a dramatic change in Sino-British relations.

Certainly, dining with the queen and citing Francis Bacon and Shakespeare in a speech to Parliament grabbed the headlines but it is the plethora of business and branding deals that now follow Xi's visit that will, without doubt, change the Sino-UK business partnership forever.

The deal is not a one-off. Follow-on deals to fund nuclear power stations at Bradwell in Essex and Sizewell in Suffolk are in the pipeline.

The magnitude of Xi's visit is perhaps no better reflected than in the fact that subsequent deals between the UK and China are likely to exceed 30 billion pounds.

In addition, further brand partnerships include tie-ups in the oil industry, starting with BP and China National Petroleum Corp as well as plans laid to build a Legoland theme park in Shanghai.

Clearly, there is a major shift in UK foreign policy toward China but this should not be seen as a dramatic, recent initiative. Indeed, there has been a concerted push over the past few years by the British government to develop trade links.

Why? Because the British government appears to have a clear insight into the changing nature of Chinese business and Chinese brand building. And to assume that the recent business deals are driven by the short-term budget deficit needs of the current UK government is to oversimplify the issue.

The British government's obsession with the public purse is no doubt a contributory factor but it is the grand modernization project across Chinese industry that is the major driving force.

Chinese business culture is rapidly moving toward premium brand building with high investment and high quality, and, above all, high technology emerging as the dominant feature in Chinese companies.

The UK government, and, increasingly, large parts of British industry have recognized this change taking place for many years now.

Indeed, a significant part of Xi's itinerary was the visit to the UK operations of Chinese technology group Huawei. Chinese computer giant Lenovo and Huawei are both shining lights that epitomize this recent rise of Chinese high-tech brands across global markets.

My research findings over the last decade point to a major change in Chinese businesses with high investment and high technology replacing low cost production as the dominant theme. And it is no coincidence that over the last decade, the UK has been the top destination for Chinese investment in Europe. The figures provide conclusive evidence that it is the UK, far more than other European competitor nations, that has understood the modernization taking place across Chinese industry. Over the last decade, Britain has attracted $36.7 billion of Chinese investment, more than double the $17 billion invested in Italy, the second highest. France and Switzerland, with $15.5 billion and $14 billion, follow in the third and fourth places.

Other noteworthy business deals that were concluded during Xi's most recent visit include: China's HNA Group's tie-up with Rolls Royce to provide Trent 700 engines to power 20 Airbus A330s. The two companies also agreed to a service support package for the engines and for an additional nine Trent 700 engines and 15 Trent XWB engines. Significantly, the Trent 700 engines are Rolls Royce's highest-quality and best-selling engines, another clear signal of confidence in the high quality and high technology approach adopted by the Chinese partner.

Also, Chinese shipping giant China State Shipbuilding Corp has been selected by Carnival UK as a 50:50 joint venture partner to manufacture seven new cruise ships, with the partnership to last for at least 10 years.

Perhaps the diversity of these deals is captured best with the announcement of a major partnership between China's Poly Group and Ambassadors Theatre Group, a clear sign that China's creative industries are also well on the path to modernisation and internationalization.

A significant car industry deal has also been signed in which Jaguar Land Rover will invest in an aluminium body plant at its factory on the Chinese mainland. This represents a first of its kind in China and should result in significant transfer of knowledge and expertise as part of Jaguar's ongoing joint venture with China's Chery Automobile.

It appears that few industries have been left untouched by this snowfall of strategic partnerships. Even the medical industry features with Sinophi healthcare pledging to build six hospitals across China, four of which will be Sinophi Oncology Centres with top AAA hospitals in China and Advanced Oncotherapy technology.

Finally, Xi's visit also led to a tie-up between the International University Innovation Alliance, an organization supported by the Chinese Ministry of Commerce, the China Investment Promotion Agency, and the UK's Canary Wharf Group. This partnership has been branded as the "China Britain Innovation Hub".

It is the word "innovation", in combination with "creativity", that most characterizes these recent partnership initiatives. Xi's visit, therefore, could go down in history as a game-changer not just in Sino-UK trade and business partnerships but crucially in the modernization and internationalization of Chinese industry.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily.