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Exploring the UK’s tech opportunity in China

Brexit has brought into sharp focus the UK’s role in the global economy, one that will be dramatically redefined in the coming weeks – demanding that we move with conviction to strengthen our global relations.

It has long been clear that China is on a steep trajectory as a modernising nation, making up ground on the West and truly becoming a tech superpower. It is paramount, then, that the UK and tech hubs around the world understand the nature of doing business with China and where collaboration can be possible and compatible with domestic values.

On 14 October, Global Tech Advocates landed in Shanghai with an international delegation of leaders – policy makers, entrepreneurs, investors, thought leaders – to learn, understand and plot a prosperous path forward with Chinese counterparts.

It became blindingly obvious to the delegation that China’s tech ecosystem has diversified across both verticals and geographies in recent years. The government has dedicated enormous resources to the creation of specific Innovation Zones, and now there are a number of cities and regions that place tech at the heart of their economic output – on an unprecedented scale. Beijing, Shanghai and Shenzhen are the centre points of this grand industrial strategy.

While in Shanghai, we spent time at the city’s AI and 5G Island, a futuristic promised land of frontier technology and advanced scientific endeavour. The region is home to Microsoft, Alibaba and IBM, among several tech titans. This district is a circular concentration of the dedicated infrastructure needed to realise potential in artificial intelligence (AI).

Within intimate proximity, the space spans the future of finance, education, healthcare and manufacturing – alongside the big corporates, the research institutions and the public bodies. This “island” forms part of a 94km square Zhangjiang science and technology zone that is now progressing into its latter stages of completion and will become one of the largest in China.

Yet if Shanghai was on a scale that was unrecognisable to most of the international delegation, Beijing, equally, did not disappoint. The group was invited to the Z-Park in the Chaoyang district of the Chinese capital – a remarkable feat of modern infrastructure development that is now home to the headquarters of five of the 30 largest digital businesses in the world.

Integrated tech hubs

Still in its nascent stages, the area has already attracted Alibaba and will come to house more than 1,200 high-tech companies as part of a fully integrated hub. The park has been specifically designed to attract foreign enterprise, sporting a liberalised business licensing policy, an English-speaking hospital, school and array of affordable housing.

This integrated approach forms part of efforts to modernise the offering and ensure that infrastructure keeps pace with the technology itself. And if that wasn’t of enough significance, the Chaoyang is just one of 16 Z-Parks across Beijing that boast such credentials.

Upon visiting these burgeoning hubs, the obvious question was: to what end? The core message from China’s domestic tech leaders was one of internationalisation and global ambition – China is open for business with Britain and the rest of the world.

Looking at the UK specifically, there are areas of the tech sector that present sizeable opportunities. I heard first-hand of the relationship between the startups and scaleups in China and the direction of merger and acquisition activity in tech. The biggest players, including Tencent and Alibaba, have been accelerating their strategic acquisitions to bring forward their capabilities in both fintech and AI.

With their academic prowess, current pace of progress and comparable consumer appetite for front-end innovation, there is opportunity alone in understanding how the size and cash liquidity of these tech titans can sponsor post-Brexit growth for UK tech companies. 

China challenges

But there are challenges to doing business in China. Representatives of the UK government, along with tech entrepreneurs, spoke about the need to commit resources to coming and understanding the market, the culture and the legislation to lay the groundwork for successful commerce. The resounding sentiment from the major stakeholders, however, was that a rising tide lifts all ships and that if the UK is willing and enthusiastic about weighing anchor, then increased collaboration levels will come to benefit everyone.

There is clearly far greater government involvement within China’s tech ecosystem – which has enabled infrastructure investments that are seen nowhere else in the world. There continue to be concerns over intellectual property and data security, and without doubt there is scope for China to step up here and play a fairer game.

There are also issues relating to the distribution of the colossal investment that, without the direction of the market, many fear has been deployed into areas that are not going to provide the desired commercial results.

The US approach to managing China’s rise is having undesired consequences for them both and the global economy – and the UK has the opportunity to capitalise on the increasing number of Chinese investors looking to London as its new base in the West. As I have experienced first-hand, the Chinese tech ecosystem offers significant commercial potential for the UK and we can be the perfect global partner for Chinese investors and entrepreneurs looking to the rest of the world for future growth.

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