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Will the UK have a trade deal with China after Brexit?


A no-deal Brexit seems to be becoming more and more likely, and yet, the country doesn’t seem any more prepared for it that it was back in 2016. Less than a third of businesses in the UK have formed a contingency plan in the event of a no-deal.

No Deal Brexit

A no-deal Brexit would hit everyone hard, but it would also open the UK up to making trade deals freely with the rest of the world. It would not affect trade with countries outside the European Union, which is precisely what the UK seems to be planning for with its Prime Minister having recently visited China for talks.

But is the desire for a trade deal with China one-sided? After all, in 2016, the UK imported £42.3bn worth of goods from China, but exported only £16.8bn to China in return. But then again, that’s not entirely proof that China wouldn’t increase its British exports demand if a trade deal was in place — the country is already hoping to widen its trade with The Belt and Road Initiative.

The hope is that the initiative will help forge wider trade paths across the globe for China and Asia. The “belt” side of it roughly equates to the land connections it will build through railroads, and the “road” refers to a sea-route of trade.

New Silk Road

Essentially, China is building a new Silk Road,  and 71 countries are already part of the project, including Russia and New Zealand.

According the Business Insider UK, the ambitious plan hasn’t been wholly supported by UK officials – where Chancellor Phillip Hammond spoke of his support, Prime Minister Theresa May seemed less than enthusiastic regarding the initiative’s prospective success. This could, of course, change as the UK’s relationship with China evolves.

In fact, we have already enjoyed success in China before Brexit has even resolved. At the start of 2018, during talks between the UK and China, the 20-year ban on British beef was lifted. The deal is purported to be worth £9bn to the UK.

Concern over “mad cow disease” saw the EU ban any worldwide exporting British beef in 1996. It wasn’t until 2006 that the EU lifted the ban, but other countries chose to retain their ban on the product, including China.

What Goods Will Be Imported?

It’s the billion dollar question – what does China want the UK to import and equally interesting is; what markets and UK businesses could potentially, fare well with Chinese consumers? According the Telegraph, top British exports the Chinese enjoy are:

  • British cars
  • Burberry, and other designer labels
  • Scotch whisky
  • Scottish salmon

It’s not just big-name brands that have a chance at success in the Chinese market either. The Creative Industries reported on the success of hairbrush and haircare brand Tangle Teezer over in China. Tangle Teezer’s International Managing Director, Gemma Clarke, confirmed in the article that China became its second biggest sales market in only 3 years trading there.

After having a produce purchased and posted on social media by a well-followed Chinese model, Tangle Teezer’s popularity in the country surged. China loves its online shopping, so influencers should not be overlooked when planning to cater to the Chinese market.

The Chinese market has a lot of potential for the right product and the right approach.

At the very least, firms need to plan for the eventual shake-up to the UK’s ties with the European market once Brexit comes into play, and time is running out to start building the foundations.

UK Construction Software

This small window of golden opportunity has been highlighted by Rebecca De Cicco in regards to the UK’s construction industry in particular. The director of Digital Node outlined how 70% of buildings over 200 metres tall completed in 2017 were built in China, and so the country is increasingly interested in building information management software and crowd simulation.

The use of British construction software has already proved its value to the Chinese construction sector in Beijing’s new airport, the Beijing Daxing International.

Projected to see 45 million passengers a year, the airport’s construction has benefited from crowd simulation software provided by UK structure design software experts, Oasys. The software alerted the construction company and designers to any potential bottlenecks, congestion problems, or other inefficiencies.

Relationship Building

But, where do you begin? The Business Magazine gave the low-down on how businesses in general should approach the Chinese market.

As with any overseas market, the magazine advises companies to consider the culture of the country they are trading with; in this case, explore China’s culture.

The general consensus is to be aware that what works in the UK may not work in China’s business ground, and as relationships can take a long time to build, jeopardising them with an ill-placed comment or miscommunication can slow that pace even further.

Leaving the EU will change our trade links one way or another. Whether or not we retain trade deals with the EU, and to what to degree, the wider world is coming to the UK. Will it be a great opportunity for businesses, as some predict?