UK businesses seek opportunities in China after Brexit
As the terms of a Brexit remain uncertain, U.K. businesses are looking to tap into the Chinese market, more so than ever.
British Prime Minister Theresa May embarked on a trip to China on Wednesday with a 50-strong business delegation, featuring sectors ranging from health care to clean energy, in her bid to cement Britain-China ties.
The trip comes amid British negotiations about an exit from the European Union, and those are giving the country an even greater need to look east, some observers said.
"Without detracting at all from the ongoing importance of EU trade to the U.K., there is an undoubted need to put much more effort into trade with the 93 percent of the world that does not live in Europe," said Michael Sippitt, chairman of Clarkslegal, a commercial law firm in the U.K.
"The geography is on China's side, the U.S. was always going to struggle with competing in Asia, so right now for the EU and the U.K. the center of world economic gravity is moving east and the best response of British businesses to Brexit is to move east as well."
Among the companies banking on this new era is health technology artificial intelligence start-up Medopad, which on Thursday inked 15 trade deals worth over 100 million pounds (about $143 million) with companies including Chinese tech giant Tencent, Ping An, GSK China and Lenovo.
Through remote patient monitoring apps and advanced analytics, Medopad offers health-care providers, pharmaceutical companies and insurance firms information, allowing them to improve medical diagnoses, develop more effective drugs and reward policyholders for healthy behavior.
Specifically, the partnership with Tencent will advance the use of AI in health-care platforms for research impact and clinical decision support.
"By working with the biggest names, Tencent being the largest technology company and doing collaborations on AI and areas that China is investing a lot of money into it, and us leveraging our medical knowledge, together we think we can add value to a lot of patients within China but also globally," CEO Dan Vahdat told CNBC.
Against a backdrop of China's ambitions for health-care reform and becoming a global leader in AI, Medopad may have hit a sweet spot.
Even less obvious sectors reported optimism during the trip.
Karen Betts, chief executive of the Scotch Whisky Association told CNBC she sees a "massive growth opportunity" in China. "As people become more affluent and more middle class, their tastes change and we would expect them to want to try more of a range of foreign imported spirits and we think Scotch is a very strong category within that."
Regulatory hurdles in the world's second-largest economy are not deterring businesses.
Betts said Chinese authorities have been "extremely cooperative" and "very helpful" in removing counterfeit Scotch from the market. And despite health regulations and cost challenges in the consumer space, she said she continues to see great potential.
Vahdat said he was also unfazed. "Our core belief in our company is that you have to stay better than everybody else and just run as fast as you can and don't worry too much about IP (Intellectual Property). Because in technology, your IP today, tomorrow is expired IP anyway because things are moving really fast."
Ushering in a post-Brexit era
As Britain re-orientates itself and seeks its own standing beyond the EU, a diversification strategy away from the bloc is key.
"As part of this new movement, new future that is coming, the government of the U.K. specifically, they are helping us even more to become an international company, working with China and other regions — probably Commonwealth countries — this is an area which we are also very focused. So for us, we haven't seen any impact. It has been positive movement," said Vahdat.
At a time she calls a "golden era" in relations between both countries, May says she is keen to explore all options for the future of the trade relationship.
Betts said she saw a "massive growth opportunity" for Scotch Whisky in China and she hoped to see tariffs go below the current 5 percent level.
With 61 million pounds (about $87 million) of Scotch Whisky exported to China last year, a free trade agreement between both countries "could really help us," she said.