WITH VIGILANCE, CHINESE FIRMS HAVE BRIGHT PROSPECTS IN UK

To avoid trouble, Chinese investors should be more vigilant in performing corporate governance and managing human resources, although Chinese businesses, in general, have a promising future in the United Kingdom.

Those views came from Fu Xiaolan, an expert on Chinese overseas investment at Oxford University, who expressed them at a time when vast numbers of Chinese companies are swarming into the UK to make investments.

Britain has been trying hard amid its sluggish economic growth of recent years to attract more Chinese investors.

“Corporate governance, especially talent management, is likely to be the biggest difficulty for Chinese businesses investing in the UK,” Fu told China Daily.

“Improving the management of human resources to help ensure employees stay willingly and taking advantage of employment contracts to secure talented employees are both effective ways of overcoming these difficulties,” she said.

The codification of important knowledge is another useful step to take, as it can help prevent the loss of significant technology and knowledge, Fu added.

“This is particularly true for Chinese companies that expand through acquisitions,” she said. “Otherwise, the UK businesses that they have spent vast sums to purchase could become empty shells.”

The UK is now home to more than 400 companies from the Chinese mainland, according to the government department UK Trade and Investment, which helps British companies achieve success abroad. In London alone, Chinese businesses make up the second-largest group of foreign direct investors.

Chinese direct investment into Europe tripled in 2011, attaining a value of $10 billion, according to a study published in June by Rhodium Group, an economic consultancy based in New York, in partnership with China International Capital Corp, a Chinese investment bank.

The report predicts the value of Chinese outbound direct investment will increase by $1 trillion to $2 trillion between 2010 and 2020 and it expects around a quarter of that will take place in Europe through mergers and acquisitions or greenfield investments, or putting money into places where no structures from previous projects exist.

“The UK can offer many assets that China needs,” Fu said. “The comparative advantages of both China and the UK complement each other.”

She said Chinese investment can help bring Britain out of recession.

At the same time, as a politically and economically stable country, the UK can give Chinese companies enormous opportunities to make their brands known internationally.

“That does not mean there will be no risk, although the prospects for Chinese investing in the UK are very bright,” Fu said,

She also called on Chinese investors to avoid making “blind investments” by weighing their business opportunities carefully.