Cross‑border restructuring offers a way to de‑risk supply chains, sidestep punitive tariffs, and build operational resilience without abandoning China entirely. It is not just moving factories from China to Vietnam or Indonesia. It requires a strategic overhaul of tax structures, legal entities, workforce plans, intellectual property arrangements, supplier networks, and leadership models. When done well, it shifts China’s role from a one‑dimensional manufacturing base to a high‑value node in a broader regional strategy.

Why companies are choosing restructuring

Over recent years, geopolitical tensions, especially US–China trade and export controls, have disrupted once‑stable global supply chains. Rising costs and regulatory complexity in China have meant many multinationals are reassessing their entire China footprint. Yet for most, exiting China is simply impractical: the supply‑chain ecosystem is highly specialised; infrastructure is world‑class; R&D capability remains strong; and the domestic market continues to grow.

Instead, cross‑border restructuring provides a more balanced path. Companies can reduce geopolitical exposure while retaining China’s strengths by shifting certain parts of production, typically low‑value or labour‑intensive activities, to ASEAN or South Asia, while keeping R&D, quality control or domestic sales operations in China.

What to keep in China and why

The first step is understanding which parts of the operation truly belong in China. For some businesses, China is an export hub. For others, it’s a domestic market centre, an innovation base or a quality control node. That functional mapping is essential. Labour‑intensive assembly might be moved offshore, but high‑value engineering, regulatory liaison or customer service may remain.

Downsizing China operations isn’t simple. Legal obligations under labour laws mean consultations, severance and possibly union involvement. Equipment sales or asset transfer may require local approvals, particularly in sensitive sectors. And shifting assets can trigger tax liabilities, companies must weigh exit costs against long‑term benefits carefully.

Sensitive relationships can suffer if the process isn’t handled transparently. Government incentives or supplier ties may be put at risk if local stakeholders feel blindsided. Clear communication and compliance are crucial to preserving goodwill.

Choosing a new host location with purpose

The decision of where to locate new operations goes far beyond low labour cost. Strategic choice today must consider trade agreements, regulatory alignment, infrastructure, talent pools, and industry‑specific incentives.

For example, moving final assembly to Vietnam or Malaysia can help firms meet rules‑of‑origin requirements for free trade agreements, qualifying goods for tariff‑free export to the EU or US. But achieving this advantage depends on genuine manufacturing value‑add, not merely repackaging.

Market access also matters: Indonesia may suit consumer‑goods businesses seeking scale, while Singapore could be preferable for regulated sectors needing compliance clarity. Infrastructure readiness varies, from ports to digital readiness, and needs to match sectoral demands.

Many emerging markets now offer sector‑targeted incentives, India’s PLI (Production‑Linked Incentive) for electronics, or Thailand’s R&D grants for biotech. It’s vital to assess these offers relative to specific company needs.

Structuring the new entity and planning the timeline

How new operations are structured affects control, regulatory exposure, and cost. Options include a wholly foreign‑owned enterprise (WFOE), joint venture, contract manufacturing agreement or strategic alliance – all with different implications for tariff control, governance and local compliance.

To qualify for tariff benefits under agreements like RCEP or CPTPP, companies need to ensure local transformation thresholds are met, not just shipment points moved. That shapes decisions around what functions to relocate and what suppliers to localise.

A phased rollout is often wiser than a big‑bang relocation. Pilot operations allow evaluation of delivery performance, compliance fit, quality standards and cost savings before full-scale implementation. Project timelines must reflect construction, licensing, recruitment, training and partner onboarding timeframes.

Tax, transfer pricing and fiscal design

Restructuring often reshapes where value is created, and that impacts tax. Multinationals must ensure operations reflect substance: functions, risks and assets must align with where profits are allocated to avoid transfer pricing disputes across jurisdictions.

China is increasingly vigilant about outbound restructuring, especially where high‑value functions or IP are shifted. Early engagement with local tax bureaus and careful planning of asset transfers, or equity restructuring, is key to managing capital gains exposure and compliance risk.

Transfer pricing models must be updated to reflect new functional roles. Suppose China becomes a limited‑risk distributor rather than the main manufacturer. Then profit allocation and intercompany pricing must align with legal reality, not just historic structure.

People, leadership and morale

The human side of restructuring is often underestimated. Talent is hard to replace, and morale can suffer if staff in China feel abandoned or insecure. Leadership continuity, internal communications, retention plans, or even relocation programmes, must be carefully managed.

Mobilising key personnel from China to the new site raises immigration, tax and cultural adaptation issues. Host countries may limit work permits or raise residency hurdles. Companies need clear plans and legal advice on visas, taxation and support for expat staff.

At the same time, building a skilled local workforce requires labour‑market mapping, training initiatives, localisation planning and collaboration with vocational schools or employment agencies.

Protecting intellectual property and data

Moving operations can expose IP and data to new risks. Protection regimes vary by jurisdiction, patent law enforcement, judicial capacity and digital data governance differ greatly. IP risk assessments should be specific to each location and business model.

Companies must decide whether to hold IP in China, in a regional headquarters, or a neutral jurisdiction, understanding the impacts on tax, licensing arrangements and exit liabilities. Licensing terms between entities need to be clear, reflecting royalty terms, legal risks, and control frameworks.

If operations shift to territories with weaker IP regimes, greater vigilance, not just contracts, is required. Partner vetting, in‑house retention of core know‑how and regional IP strategies help limit leakage.

Managing supplier and customer relationships through transition

Supply change disruption is a real danger. Long‑standing supplier ties and delivery expectations can be upended if operations move too quickly. Identifying sole‑source vulnerabilities or critical clients is essential before the transition begins.

Maintaining customer service levels during the shift requires interim logistics planning, buffer stock, possible dual sourcing and renegotiation of contracts to reflect new transit routes or import/export jurisdictions.

Proactive, transparent communication builds trust. Customers and suppliers benefit from clear timelines and commitment to quality. In some cases, joint planning with anchor suppliers or logistics partners can smooth the transition; others may mean onboarding new local sourcing partners in the host country.

When is restructuring the right move?

Cross‑border restructuring may sound complex, but it offers more than risk mitigation. For many companies, it is a strategic move designed to future‑proof operations in a world where agility and resilience matter as much as efficiency.

Businesses must assess their own vulnerabilities: Are specific tariff risks or export controls exposing particular product lines? Is there over‑reliance on a single site or region? Which functions are portable? Which need to stay in China? Will a partnership model or contract manufacturing serve just as well as full investment offshore?

Cost savings alone are rarely enough. Firms must weigh infrastructure limitations, legal unknowns, language or cultural barriers, and balance must favour long‑term operational stability over sheer low cost.

Finally, internal alignment is critical. Leadership must treat restructuring as organisational change, not just logistics: reshaping workflows, managing talent, and preserving morale during the shift, all while sustaining governance, communication and the integrity of service delivery.

The post What is cross-border restructuring? appeared first on Focus - China Britain Business Council.

In a nutshell, a distributor is a middleman between a producer and another entity in the supply chain, be it a wholesaler, retailer or end consumer. As a reseller of products, a distributor buys directly from the producer and sells the products to those further down the chain. The main advantage of this entry model is that you can ride on the coattails of a distributor’s already-established network of sales channels without a substantial initial outlay on infrastructure and logistics. Furthermore, since a distributor’s scope of operation can be very wide – encompassing customs clearance, storage, shipping, sales and marketing – those opting for a more comprehensive service may be inclined towards this method.

Distributors can be found at trade shows and exhibitions, through referrals or third-party specialist agencies, via introductions by chambers of commerce and on e-commerce platforms. While it may be tempting to choose the first prospective distributor that comes along, rogue distributors have the potential to break your business in China, so proceed with caution and circumspection.

The best China distributor is more than just a sales channel

The best distributors do more than move boxes. They understand your sector and can navigate local compliance, consumer preferences and channel dynamics.

When approaching a potential distributor, ask about their experience with foreign brands. Can they provide case studies? Do they understand your product’s positioning and pricing expectations? The ability to align with your market vision is just as critical as having an expansive sales network.

While many UK businesses hope to find a single nationwide partner, the truth is China’s market is highly fragmented. A distributor with reach in Shanghai may be weak in Chengdu. Often, a regional or non-exclusive approach is more practical, if not essential.

At the same time, consider what other brands they carry. Are they already working with competitors? If so, your product could become a second priority. Conversely, partnerships with complementary brands can open the door to co-marketing and bundled distribution.

Due diligence is not optional

A recurring pitfall for UK exporters is inadequate background checks. It’s not enough to meet a potential partner at a trade show or through an online lead and assume they are credible.

You must verify that the distributor is legally licensed and has the correct business scope for your product category. This means checking their registration with the State Administration for Market Regulation (SAMR) and ensuring they hold any required import or distribution licences – particularly important for highly-regulated sectors like cosmetics, supplements, or medical devices.

Financial stability is another critical factor. Distributors with poor cash flow or excessive debt may delay payments, underinvest in marketing, or fold mid-contract. Engage a local consultancy to review their credit reports and litigation history. Reliable distributors should also be willing to provide references from other foreign clients – ideally those with similar requirements to yours.

When speaking to those references, don’t settle for platitudes. Ask whether targets were met, whether the relationship remained collaborative over time, and how the distributor handled setbacks.

Legal and commercial foundations matter

Once a distributor looks like a good fit, the real work begins: crafting a robust agreement. This should clearly define the scope of responsibilities, sales targets, marketing commitments, pricing expectations, and intellectual property (IP) protections. Be especially cautious with clauses around minimum resale pricing. Under China’s Anti-Monopoly Law, you generally cannot enforce such restrictions.

Also consider territory definitions. Will this distributor have exclusive rights to all of China? Or just to certain cities or channels? Flexibility here can give you room to work with multiple partners if needed.

It’s equally important to plan for the end of the relationship. Who owns the IP? What happens to unsold stock? Can they continue using your brand on e-commerce platforms? Many distributors register WeChat accounts, Tmall stores, and even your product’s Chinese name in their own company’s name, so clarity from day one is essential.

Don’t overlook communication, culture and compliance

Even the best-looking distributor on paper may prove difficult if communication breaks down. Pay close attention during early conversations. Do they respond promptly? Are they transparent and realistic? Do they push back or ask insightful questions – or simply say yes to everything?

Cultural alignment also plays a role. In China, business relationships often follow a slower pace at first, built on mutual trust and informal connection. A distributor that’s too quick to sign may not be invested for the long haul.

Beyond this, assess how they handle the practicalities of doing business in China. Can they manage customs clearance, pay import duties, and comply with labelling standards? Have they successfully registered similar products before? Lack of regulatory know-how could delay your shipments or result in costly rejections.

Finally, any distributor operating in today’s China must understand the country’s unique digital landscape. Success increasingly depends on platforms like Tmall, JD.com, WeChat, and even Douyin (the Chinese version of TikTok). Ask about their e-commerce strategy. Do they run flagship stores on these platforms? What’s their relationship with local influencers and content agencies? Offline distribution alone won’t cut it in a digitally-native market.

Align on control, involvement, and expectations

One of the most strategic choices you’ll make is deciding how involved you want to be. Are you looking for a turnkey partner – or do you expect input into branding, pricing, and local marketing?

If your brand is premium, your distributor must protect that positioning through selective channel choices and consistent messaging. If you’re aiming for mass-market reach, they’ll need to scale fast – and report metrics regularly.

Set expectations from the outset. Will you approve all campaigns? What reports will they provide, and how often? Is there a dedicated team for your account? The more proactive and structured the relationship, the more likely you’ll succeed together.

Final thoughts

Selecting a distributor in China is as much about partnership as performance. With the right groundwork, UK exporters can build long-lasting, mutually beneficial relationships that open the door to one of the most lucrative markets in the world. But it requires patience, planning, and a sharp eye for detail.

The post How to choose the best distributor for your business in China appeared first on Focus - China Britain Business Council.

While great strides have been made in recent years, it seems there’s still a long way to go, and China’s central government is not all that impressed with the sector. So argue Paul G. Clifford and Christopher Logan in their new book China Logistics: From Laggard to Innovator (Routledge). So Paul French sat down with Paul Clifford to chat logistics …

In 2022, the Chinese government criticised the nation’s logistics industry as ‘large but not strong’ (da er buqiang). But China’s logistics sector, from haulage to refrigeration, shipping and warehousing, has obviously made great strides since the 80s and 90s – so where are the main weaknesses still to be found?

Since the economic reforms began in the 1980s, China’s logistics have made enormous progress, but still struggle to meet the needs of industry and commerce. The key issues remain the fragmentation of the sector (logistics firms without scale), the slow pace of logistics outsourcing to 3PLs (third-party logistics), cut-throat competition resulting in poor service quality and low profitability, the high asset intensity of logistics firms, and weaknesses in key areas such as multi-modal (truck-to-train) and chilled-chain logistics.

You note that the government (national and local) plays a big role in the development and improvement of China’s logistics network, far bigger than we have seen in Europe or North America. Can you elaborate on how central and local governments work with the industry?

China’s central government has played a vital role in two respects. Firstly, in setting the bold planning goals for the sector, which in turn guides capital allocation. And secondly, through investing heavily in upgrading China’s transportation infrastructure, over which the logistics run. Meanwhile, local (mainly city-level) governments, in competing with each other for investors, jobs and fiscal revenues, have been instrumental in creating logistics hubs across the nation, whether through gateways for the railway land-bridge to Europe (as part of the Belt and Road initiative), highly automated ports, robotised e-commerce centres or cold-chain storage.   

You also talk of the ‘headwinds’ China’s logistics sector faces – international tension and massive disruptions. It looks likely we’re about to go into a significant ‘headwind’ with both a new administration in Washington DC and a raft of China-related policies from the EU. How do you think these will affect the sector?

You are correct. The critical uncertainties and headwinds are to be found internationally. But despite the geopolitical tensions and the new US administration, it will likely prove harder than many think to dismantle the global supply chain that has been built up so carefully over four decades. That said, China’s growing exports are bound to face increased pushback from nations with a large trade deficit with China. China may be expected to respond, for instance by investing in manufacturing in the countries to which it currently exports. The logistics industry will in turn inevitably need to adjust to these changes.

Do you think China has been a genuine innovator in logistics in any way, or simply thrown money and man power at the issue?

The Chinese government has invested heavily in its roads, ports and rail (and is now beginning in high speed freight rail). However, the big investment in China’s e-commerce logistics has come from private firms. This investment ranges from air cargo hubs to integrated IT platforms, AI for transportation management and robots for all kinds of package sorting and storage. In these respects, there is no doubt that China is truly innovating and leapfrogging the likes of UPS. The return on all this investment needs to be seen in relation to its social as well as economic and commercial impact and over the long term. History will be the ultimate judge of this. Did the Victorian UK rail system propel our industry and commerce (and society) forward?

In the book, you seem to suggest China’s logistics sector also has a role to play in China’s climate change and environmental initiatives – EV delivery vehicles etc. Is this happening or just hopeful rhetoric?

The logistics sector is a major producer of greenhouse gas emissions. Addressing this issue in China is certainly not rhetoric but a central part of China’s green transition. These efforts range from new propulsion systems for container liner shipping and shifting goods onto the railways from the roads and from air cargo, to the introduction of new autonomously-driven hydrogen truck corridors plus EVs for the last mile. It also includes the use of advanced technology to drive efficiency in goods delivery and to provide matching loads to avoid the dreaded “empty back haul”. This is highly transformative and, in some areas, a “low-hanging fruit”.

China’s logistics sector seemed to rise to the challenge of Covid-19 and the government’s zero-Covid policy successfully. Am I right in thinking this? And what are the longer-term lessons for the industry (in China and globally) from that sudden, unexpected headwind?

You are perfectly correct. While China’s overall response to Covid-19 may have fallen short in some respects, when it came to logistics, the Chinese government developed some smart workarounds with the result being that the delays at Chinese ports were nowhere near as severe as in the USA. I think a longer-term lesson is that logistics should not be an afterthought, but closely integrated into government emergency action so as to permit a coordinated and speedy response to unexpected events.

Taking this a step further, it is worth noting the degree to which China’s well-defined and well-delivered industrial policy towards logistics is yielding vital results, which are then passed on to the broader economy. 

The post Are Chinese logistics companies good enough for your business? appeared first on Focus - China Britain Business Council.

In late 2021, two Ming dynasty terracotta clay figurines returned to China after residing in a private collection in the United States for nearly a century. The figurines were presented to the Shanghai Museum for inclusion in their collection of 66 similar Ming dynasty figurines, which owner Suzanne Fratus had seen at the Asian Art Museum in San Francisco in 1983 when they were on loan from the Shanghai Museum.

Fratus’ grandfather, John Herbert Waite, who was an ophthalmologist and spent some time working in Asia, was gifted the figurines by a Chinese patient whom he cured. He returned to the United States with them in his possession in the early 1900s, and the figurines were passed down through the family to Fratus, who decided to return them to China via the Chinese consulate-general in San Francisco in April 2021.

The return of the figures, which was facilitated by the freight forwarding specialists at CBBC member company Heighten, is not just a story of cultural appreciation across borders; it also sheds light on the unique skills needed to ship fine art and artefacts across borders.

“The list of specific challenges when shipping cultural artefacts is very long,” says James Grayland, Heighten’s International Director. Beyond obvious requirements like making sure items are properly packaged so they don’t get damaged in transit, there can be multiple layers of bureaucratic and communication-related hoops to jump through when transferring art or artefacts to and from China.

Suzanne Fratus’ clay figurines ready to be returned to China. Source: Heighten

Museum objects, for example, are usually national property, requiring permits at the national and local levels, which, in recent years, have typically been issued very close to the time of shipment. In addition, objects over 100 years old like the clay figurines in this story are treated as antiquities under the jurisdiction of the National Cultural Heritage Administration (part of China’s Ministry of Culture & Tourism), meaning that they need to be handled differently to modern art, for example.

In addition, Grayland notes that there can often be a significant cultural gap. “The level of transparency on the ground handling process or with China customs is lacking,” he says. “Furthermore, often fine arts teams do not have regular customs interaction, meaning their depth of knowledge can be lacking, combined with possible language barriers and a lack of understanding of norms in other countries.”

As a result, communication is key. “Like many projects involving China, the key is to build relationships across all the stakeholders, and where possible and applicable, to open up communications across all those parties,” says Grayland. “What we find is that chains of communications traditionally are just that, ‘chains’.” Communications move back and forth between single points of contact, but this can be very inefficient. Instead, Heighten focuses on creating broader networks of relationships from the get-go, so that “as the pressure increases, communications are much more effective and the level of trust & understanding higher. Likewise, there are much better lines of communication across all stakeholders, who, if necessary, can develop smaller expert groups to work on specific technicalities.”

As with most interactions with China these days, one of the major challenges Heighten is having to work with is Covid-19. “The majority of the projects we worked on before required courier supervision end to end. For large exhibitions this can be a governmental and insurance-based prerequisite,” Grayland explains. Of course, China’s strict quarantine requirements under the ongoing zero Covid policy now mean that end-to-end supervision by a single individual is not possible.

“Due to this we have been helping clients by offering a bookend courier solution, where our team can step in and meet the shipment, then carry out due diligence and monitoring of the exhibits in place of their own team,” says Grayland. “This is an exciting new area for us, however it does create new dynamics and requires very clear communications and agreement on expectations between the multitude of different parties involved.”

Get immediate access to the China market with Launchpad, CBBC’s flagship market entry service. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out more.

The post The challenges and opportunities of shipping fine art to China appeared first on Focus - China Britain Business Council.

Where and how can you find the right shipping/freight company for you?

Whether you are importing from China or anywhere else in the world, freight forwarders will play a pivotal role in your business. It is important that you choose the right forwarder for you, which can appear to be a minefield. Look for a forwarder that offers expertise and advice. This will give you immediate feedback and confidence that you are choosing the right one for you. While it is always good to get cost comparisons, quality of service and speed of response should give you a better indication of the service levels you will get moving forward – the cheapest isn’t always the best. Liken it to if you were wanting a new kitchen or building work; you would look for a reputable builder to use, you would want a professional, and your logistics partner should be the same.

What are the customs rules and where can you find them? 

The freight company you choose (especially if it is a reputable one) should be able to navigate you through all the processes and legislation on the product you are looking to purchase from overseas. While you are ultimately responsible for choosing the right commodity code for your goods, a goods forwarder will offer guidance. There are also departments within HM Revenue & Customs that will be able to advise on correct commodity codes, which dictates the duty you will pay. Your freight company should be able to steer you in the right direction.

What costs and fees are involved?

The final costs you face, in particular, the cost of freight from China, are very much dependent on the Incoterms (International Commercial Terms), a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law, of the sale of the product to you. This will dictate which part of your shipment’s journey you are responsible for. The two most common terms are: 1) Ex Works, where you are responsible for all local charges in China, as well as the freight charges to the UK and UK Local Charges, and 2) Free on Board (FOB), where you are only responsible for the freight charges and UK local charges.

A few important things to note:

• JAG-UFS usually recommends FOB to their clients, as this gives more control of costs and shipping to the UK, whether by air or sea. You are in more control of your shipment and there are no nasty surprises of local charges at origin.
• Beware of suppliers offering to get your shipment to the UK for “free”. Especially for ocean freight shipments: often, the local consolidators for less than container (LCL) loads will offer incentives to suppliers and as the UK importer, you will receive overinflated import costs which will have to be paid before the release of your shipment.

How do payments work (upon order or upon delivery)?

Payment is very much dependent on whether your shipment is by air or ocean and your relationship with your supplier. For air shipments, your supplier would probably expect full payment before releasing the shipment to your chosen forwarder. For ocean freight, ownership of your shipment will only happen when full payment has been received and on production of the original bills of lading. Once paid, the supplier will issue a stamped copy of an original bill of lading which can either be surrendered to the local forwarder in China, who will then either send an “Express Release” and no original will be required in the UK, or the supplier will send the original to you, which you will have to send to your freight company to gain release of the shipment. The payment for ocean freight shipments will need to be done at least a week in advance so that the express release or sending of the originals to the UK well in time before the shipment arrives to avoid shipments being delayed awaiting release.

What are bonded warehouses and where should you store your product?

Bonded warehouses are licensed warehouses that can store goods without duty or VAT being paid at the time of importation, although there still must be an import entry produced at the airport or port of arrival and goods can only be delivered directly to the chosen bonded warehouse. Shipments can then be called off in smaller batches, with duty and VAT being paid at the time orders are needed. Bonded warehouses work well for higher value items or for goods that are going to remain in bonded storage for long periods. However, since the introduction of post VAT accounting, the requirement for a bonded warehousing is not as prevalent as before. If you register for post VAT accounting, this will help you defer VAT payment and you will not have to pay at the time of importation.

This article is part of a series on importing from China. See all the articles in the series below.

Part 1: How to source a manufacturer in China
Part 2: How to source and manage suppliers
Part 3: How to ship products and navigate customs

Click here to read our Exporting to China series

Get immediate access to the China market with Launchpad, CBBC’s flagship market entry service. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out more.

The post Importing from China: How to ship products and navigate customs appeared first on Focus - China Britain Business Council.

After 618 came to an end a couple of months ago, overseas brands selling on cross-border e-commerce platforms in China started shifting their attention to the next major promotional festival in China, Single’s Day (also known as 11.11 or Double 11).

As one of the most competitive e-commerce markets in the world, China has a variety of requirements for both the e-commerce platforms and the merchants who sell on them, all of which are essential for achieving ongoing growth and consumer satisfaction. Therefore, the preparation work for Single’s Day, one of the biggest online shopping festivals in China, starts in July even though the actual event does not take place until November. Even if you are too late for this year’s event, this article should serve as a guide for when to start preparing in future years.

Managing inventory

Most people know that traffic and sales on e-commerce platforms in China peaks in November, which makes inventory planning and logistics preparations crucial to ensuring that there is sufficient stock replenished and ready for the expected large sales volume.

There are two main models of cross-border e-commerce logistics in China: bonded import and direct shipment. Regardless of which model a brand is using, there are key timings for inventory preparation.

Take Tmall Global. For Single’s Day 2021, brands selling through bonded warehouses and working with Cainiao as their logistics partner were required to do the following:

• Submit their replenishment plan before 27 August
• Get the products delivered to the port (by air, freight, or railway) before 27 September
• Get their products to the warehouse before 13 October

The process from inventory planning to getting products listed on an online store can be challenging for brands that are new to this journey. Many brands are new to preparing for such a largescale sales promotion and are unfamiliar with all the documents and communication needed for each step, including commercial invoices, packing specifications, shipment bookings, and arranging for land transportation from port to warehouse.

It is suggested that brands liaise closely with their contact from the e-commerce platform and obtain clear to-do lists regarding the information or details that are required in the preparation phase. Although brands can choose whether to handle the whole or any part of the transportation journey themselves (such as only international freight), working with one provider that can deal with every step is often the best choice when it comes to investment of time and effort.

One particular aspect that brands should consider is the unpredictability brought about by Covid-19. On the one hand, international freight shipments might be delayed from the country of origin; on the other hand, it may take a longer time for ports in China to release goods for domestic delivery due to the combination of the large volumes that need to be handled during the peak seasons and possible stricter Covid-19 inspections. It is suggested for brands to get ready to use other measures to bypass these potential hurdles, such as considering air freight or a global fulfilment centre (GFC).

Preparing store operations

In addition to inventory, preparation is also needed when it comes to store operations. The whole point of getting products ready to sell by the time the sales promotion arrives is to hold a successful campaign.

Usually, the portal for the Single’s Day campaign will open in September, which is also the time when brands can look at the requirements set by the platform for merchants to participate. These requirements can include store rating, years of store operation and base sales volume.

Merchants should also check the e-commerce platform they are using to determine if there are any new initiatives that they or their brands can take part in, such as category-specific promotional tools or specific advertising resources. If a brand submits a significant enough promotional budget for the planned festival, there is a chance that the platform contact for that category will reach out to the brand personally and negotiate cooperation opportunities.

A suggestion for overseas brands is to try to leverage possible opportunities with the goal of maximising exposure, store visits and sales, especially because these huge promotions are a crucial opportunity to receive substantial return on ad spend and investment. In addition, it is also very important to prepare for out-of-app promotions in order to preheat and build up hype, thereby boosting the store’s performance during Single’s Day.

Examples of pre-heat activities include paid media promotions and live streaming sessions prior to the shopping festival, which can be significant channels through which to bring in a tremendous amount of exposure, encouraging more potential customers to make purchases during the actual festival. All of this helps to create the busy and sales heavy atmosphere across China during October and November.

The post How to prepare your logistics for Singles’ Day appeared first on Focus - China Britain Business Council.

For many years now, UK importers have fallen into the trap of letting their Chinese suppliers ‘pay’ for freight of LCL (Less than Container Load) shipments from China to the UK.

On the face of it, it seems like a great deal. The supplier is offering to pay the freight costs and is taking on the headache of arranging the shipment. However, the reality couldn’t be further from the truth.

The actual arrangement involves Chinese consolidators (in conjunction with their UK counterparts) offering the suppliers a ‘rebate’ scheme. In return for using their consolidation service to the UK, the consolidators will offer the supplier a rebate of up to £200 per cubic metre of freight given to them.

Someone somewhere has to recover this amount of money being offered, and in simple terms, that someone will be the UK importer. When the shipment arrives in the UK, the importer will be made to pay overinflated, made-up costs so that the consolidator recovers the ‘rebate’ and can share these unscrupulous profits with their UK counterparts.

On their notice of arrivals document, they will see made-up charges such as:

• Interim Currency Adjustment Surcharge
• Currency Adjustment Factor
• China Import Service Fee

As the freight was pre-paid, there is no currency that needs to be exchanged or adjusted. This is just a made-up charge.

There are also service fees for documentation that can be well over £100, or terminal handling charges that are almost double what the industry norm.

Unfortunately, once the shipment arrives, there is no legislation on what the consolidators can charge. They can simply make their own tariff charges and will not release the shipment to the UK customer until all charges are settled.

So it is important that all importers are aware of the pitfalls of accepting ‘free shipping’ – there really is no such thing – and it’s likely to end up costing more in the long run. For importers looking to bring in goods from their Chinese suppliers, it’s important that they speak to UK professionals who have experience in the China market.

It is advised that importers purchase shipments on a Free On Board (FOB) basis, which enables the importer to control the charges and the schedule. This Incoterm rule specifies that all local charges in China are paid by the supplier’s account and the UK charges are controlled with the importer’s forwarder. There should be no hidden costs involved when receiving shipments through a reputable forwarder.

For more information on importing from China, contact gary.wilcox@jagufs.com

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Technological advancements, international collaboration and alignments of objectives have helped improve the quality and speed of China’s supply chains in recent years, according to Alex Makino-Farrell, CBBC‘s China market business adviser. But the pandemic has exposed certain fragilities and illuminated a need to improve resilience in the future. “During the Covid-19 pandemic, supply chains, particularly those to which China is central, have experienced disruption at both ends,” he says. “The impact was first felt at supply level as China went into lockdown before demand took a hit as other countries began to feel the effects of the pandemic.”

The initial impact of the lockdown on supply chain activity in China was limited, as it coincided with the low-season period surrounding Chinese New Year, explains Emily Zhu, head of logistics development and sourcing at AkzoNobel China. “The three greatest immediate challenges facing supply chains at present are raw materials shortages, limitations to manufacturing capacity, and a shortfall in available transportation resources,” she says. “Many of the challenges in this respect are linked to restrictions on movement and quarantining requirements arising from the pandemic. For example, shipments being blocked within Chinese ports after arriving from overseas, and labour shortages as migrant workers choose to remain in their hometowns and drivers are required to quarantine when travelling between Chinese cities.”

The three greatest challenges facing supply chains are raw materials shortages, limitations to manufacturing capacity, and a shortfall in available transportation

Outside of China, Peter Riches, managing director, SinoScan UK says that the huge increase in demand for air freight during the pandemic necessitated transporting as many goods as possible by sea – a challenge which SinoScan tackled by working closely with its customers to understand their specific needs and tailor operations accordingly. For Andrew Nyadzo, head of Procurement, Volution Group PLC, keeping lines of communication open with Chinese partners and suppliers was key to combatting challenges of supply and demand during this time. “Having an on-the-ground presence and the continuity this has created has even made new product launches possible, despite uncertain market conditions,” he says.

Having an on-the-ground presence and the continuity this has created has even made new product launches possible, despite uncertain market conditions.

A key issue that has been revealed due to the pandemic is the centrality of China within global supply chains. Nyadzo explains that although his company considered sourcing from suppliers outside of China as the pandemic hit, this would merely have mitigated rather than eliminated risk, as core components still tended to come from China. “While it used to be assumed that if the United States ‘catches a cold’ the whole world is affected, the same can now be said of China,” he says. “And that in order to address the potential issues associated with this phenomenon, wider discussions need to be had by the industry as a whole and at all levels of the value chain.”

A number of ongoing challenges currently face supply chains, including geopolitical factors such as the US-China trade war that makes it difficult to ensure security of supply; and the high unemployment rate in China as a result of the pandemic, which has resulted in a reduction in exports. However, recent investment in Chinese SMEs – particularly in new machinery and education and training – create opportunities, and technological advances such as supply chain digitalisation were further acknowledged as important developments to be embraced.

Chinese government-backed initiatives also continue to present opportunities within global supply chains. Not only was a commitment made by the Chinese government during the Two Sessions 2020 to continue its efforts to stabilise supply chains, but the panellists all acknowledged the opportunities created by China’s Special Economic Zones (SEZs). “Notwithstanding the potential for some parts of supply chains to become more localised in the short term, the continuation of large-scale international trade makes it sensible for small- and medium-sized UK companies to take advantage of the local resources and tax benefits offered by SEZs in the medium term,” says Riches.

Chinese government-backed initiatives such as China’s Special Economic Zones continue to present opportunities within global supply chains

Sustainability was also viewed as an increasingly important factor in shaping the future of the supply chain. “The carbon footprint involved in shipping parts from China to the UK cannot be avoided simply by manufacturing elsewhere, given that components still need to be shipped from China earlier in the chain,” says Nyadzo. “This issue necessitates industry-wide discussions, particularly within the electronics industry.”

Supply chains are already showing signs of bouncing back from the effects of the pandemic. AkzoNobel’s cross-functional approach has allowed the company to tackle challenges at all levels of the supply chain, with dedicated teams reviewing developments on a daily basis. This holistic approach has allowed the company to achieve 80 percent recovery of business. Similarly, a number of SinoScan’s suppliers have reported recovering capacity of between 80 and 90 percent of their pre-Covid levels. However, with a reported average of around 50 percent reduction in sales during the first quarter of 2020, SinoScan’s suppliers are keen to get going and progress is already being made in this regard.

The developments of the last six months have illuminated the potential for longer-term improvements in the design and operation of global supply chains. “The pandemic certainly has exposed weaknesses in the global supply chain,” says Nyadzo. However according to Riches the changes required are less comparable to “rewiring a house” than to simply “checking the security of the wiring.”

“The pandemic has enhanced end-to-end cooperation, cross-functional decision making, and collaborative risk management,” says Zhu. It also has amplified the value of procurement, resulting in an increased voice being given to key players in the supply chain that had previously been overlooked.

Additional reporting by Hannah Williams

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Supply chains have been severely disrupted by the Covid-19 virus, turning already complex logistics and payment structures into something of a minefield. Adnaan Mukta explains how

The Covid-19 crisis has severely disrupted the supply chains of many UK businesses that depend on imports from China. The Bank of England reports that production stoppages in China have hit output in sectors ranging from car manufacturing to aerospace.

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Thanks to modern technology, we are able to exchange views online, on some very important issues to both our countries in this difficult time. The spread of Covid-19 around the world poses a grave challenge to human society. It seriously threatens the safety and health of the people, strikes a heavy blow to global production and demand, and severely undermines the economy and our societies.

The public health crisis is a major test for all countries of the world. It is leading proof that the world is undergoing profound changes unseen in a century and that in this world, we all belong to a community with a shared future.

In the face of this crisis, how is China responding? China is the first country in the world to report the epidemic to the WHO. The first to identify the pathogen of the virus, the first to share the full genetic sequence of the virus with WHO and other countries. The first to adopt comprehensive and effective measures of prevention and control, the first to achieve preliminary but important success in containing the virus. The first to bring economic activities back to normal across the country. In this battle against the virus, China has followed three principles:

Saving lives The People are the focus of all other efforts. President Xi Jinping has reiterated that we should always regard the safety and health of the people as a top priority. Acting responsibly in record time after the outbreak, the Chinese government established an all-dimensional and multilayer network of prevention and control that involved everyone from the central government down to the grassroots communities. The measures that were taken were the most comprehensive, strict and firm, that the world has ever seen. The principles of early diagnosis, early reporting, early quarantine and early treatment have been followed. Covid-19 patients were admitted into designated hospitals that offered the best experts, sufficient resources and timely and tailored treatment. Facts prove that these measures were timely, decisive and effective. The whole nation was under overall planning and fully mobilised to meet the crisis head-on and bring the virus under control.

Helping each other. China has acted responsibly, not only for the safety and health of the Chinese people but also with the global public health in mind. From the very beginning of the outbreak, China has been sharing what we know with the international community. From reporting the epidemic, providing a full genetic sequence, to sharing experience of prevention, control and treatment. China has also sent 19 medical teams to 17 countries, and donated much needed medical supplies such as masks, protective gowns, testing kits and ventilators to more than 150 countries and international organisations including the UK. This public health crisis proves that helping each other is the only way to a final victory over the virus.

Standing in solidarity. According to IMF estimation, the world economy will contract by three percent in 2020. The slide will be much worse than that caused by the international financial crisis in 2008. In the face of the grave situation, only solidarity can tide us over and prevent economic slowdown from evolving into an economic recession. At an extraordinary G20 leaders’ summit two months ago, President Xi Jinping said, at such a moment, it is imperative for the international community to strengthen confidence, act with unity and work together in a collective response. He also said that we need to enhance the international micro-economic policy coordination and take collective actions, cutting tariffs, removing barriers and facilitating the unfettered flow of trade so as to restore confidence of a global economic recovery.

China and the UK are partners in the battle against Covid-19. In a matter of one month, President Xi Jinping and Prime Minister Johnson had two telephone conversations in which they reached an important agreement on China-UK joint response to the virus. Many of our senior ministers are talking with Ministers from the UK, and China and the UK have engaged in close cooperation and overall China-UK relations. There have been frequent telephone conversations between Vice Premier Hu Jinhua and Chancellor Sunak. Between Director Yang Jiechi and Sir Mark Sedwill. Between Councillor Wang Yi and Foreign Secretary Raab and between Health Minister Ma Xiaowei and health secretary Matt Hancock. I myself have close communication with the UK government secretaries, ministers and senior officials here in London.

China and the UK have engaged in close coordination and cooperation in fighting against the epidemic. We have provided each other medical supplies, shared information and experience and conducted joint R&D on vaccines and medicines.

China and the UK are both strong advocates of multilateralism. We support important roles for the WHO in the global response to the virus, stand for stronger cooperation, and the framework of the G20 and the work to improve global public health governance.

Both China and the UK are important participants, facilitators and beneficiaries of economic globalisation and trade liberalisation. In this difficult time, it is important that our two countries uphold open and win-win cooperation and support free trade, safeguard multilateralism and ensure a global industry, and that supply chains are open, stable and safe.

Liu Xiaoming speaking to CBBC members on a Webinar on May 5, 2020.

While the international community is focusing on fighting against Covid-19, some US politicians are busy spreading rumours and slanders and turning a blind eye to China’s enormous efforts, sacrifices and contributions, by politicising public health issues, by sticking the virus label on a specific region and stigmatising China.

Regrettably, a few politicians in the UK have been addicted to the Cold War mentality. They compare China to the former Soviet Union and urge a review of the China-U.K. relationship, and even call for a new Cold War. Such talks are a political virus. If they go unchecked they will poison the China-UK joint effort, and even international solidarity, just as it’s needed most in the battle we are fighting.

They also undermine UK-China political mutual trust and cooperation across the board. We must stay on high alert and say no to these remarks. We should make it clear to the trumpeters of such a fallacy that China is not a former Soviet Union and the Cold War has ended for good. Peace and development are the saying of our times and also the common goal of China and the United Kingdom.

Chinese and British businesses have always played an important role in developing China-UK friendship and cooperation and promoting prosperity and stability in the world. The outbreak of Covid-19 has caused a temporary slide in China-UK trade. Some companies may encounter difficulties in payment, collection and logistics. On the brighter side, the positive factors of China-UK relations remains unchanged. The economies of our two countries are still highly complementary, the foundation for economic, trade and investment collaboration is still solid. Our businesses are still confident in China-UK cooperation. The Chinese word for “crisis” is a combination of two meanings, namely “crisis” and “opportunities”. In the face of a crisis, we always focus on finding opportunities in the crisis and turning the crisis into opportunities. In this time of difficulty, how do we turn this crisis into opportunities and speed up development?

Here are three suggestions:

As China’s economy takes the lead to recover there will be opportunities up for grabs. China has Covid-19 under control and continues to consolidate the initial success. Its economy is showing a steady momentum of recovery. As of the end of April, 99 percent of large-scale enterprises have reopened and 95 percent of staff and workers are back to work. Manufacturing PMI was above the threshold in both March and April, reaching 50.8 percent in April. According to a survey conducted by the Ministry of Commerce covering more than 8,200 key foreign companies in China, 76.6 percent had powered up 70 percent of their production capacity by April 28^th.

That battle against Covid-19 has also created opportunities for China’s economic transformation and upgrading. It has given rise to a ‘stay at home’ economy, cloud office, digital economy, Artificial Intelligence and healthcare. The potential for further growth in these areas will be huge.

China has become a major global supplier of medical products. This represents China’s contribution to the global response to the Covid-19 pandemic and helps transit the industrial and supply chains for these products in the future. China will continue to be the factory and the market of the world. China will remain an important powerhouse for world economic growth. It is my hope that British Business will seize opportunities in China’s economy and take the lead in global economic recovery once the pandemic is over.

As China pursues a more open world economy, there will be opportunities up for grabs. China’s enormous success in the past 40 plus years is attributed to reform and opening up. Going forward, deeper reform and further opening will continue to enable China to achieve even greater success.

China will continue deepening reform and opening its market wider to the world. This will not be held back by Covid-19. The Chinese government is implementing fully the policy of a pre-establishment, national treatment, plus an active list. It is also working on shortening that list and promoting the building of pilot free trade zones and free trade ports. The 127^th China Import and Export Fair will take place online in June. The 3^rd International Import Expo will be held in November. Both events will create valuable opportunities for the mutually beneficial cooperation between China and the rest of the world. We look forward to seeing you all at this important event.

Moreover, China and the UK are engaging in discussions on arrangements for a Free Trade Agreement. China is now the third-largest export market for goods from the UK. The UK is the third-largest trading partner for China in the EU. It is also the largest destination for investment in Europe. I believe that in building an open world economy, China and the UK will find new impetus for trade and economic cooperation in the future. Our two countries can also identify important opportunities for revitalising the world economy.

The opportunities in building a Silk Road of public health will be up for grabs. The ongoing battle against Covid-19 tells us that we must make long term plans for global public health. We want to be well prepared for and gain an advantage in any future outbreaks. This means we should improve governance and in doing so we must enhance the leading role of the UN and the WHO. We must come together as a community. The Belt and Road Initiative offers important routes to building a community of public health. With its goal of promoting economic growth along the routes, safeguarding regional and global peace and stability, BRI can help partners to build stronger and more efficient public health. Building a Silk Road of public health could contribute to building and improving global health governance. In turn, it could open up more space for high-quality cooperation on the Belt and Road Initiative.

In response to the Covid-19 outbreak, China Railway Express opened a green channel for medical supplies and daily necessities to reach Europe in time and hassle-free. Amidst shrinking global trade, China Railway Express will facilitate the movement of goods across borders between China and Europe to alleviate the impact of the epidemic on industrial and supply chains.

I’m confident China and the UK could benefit from tapping the potential of BRI. The UK’s experience, knowledge and creative ideas will complement China’s capital technology and commercialisation capability. Together we can go for win-win results.

Covid-19 is a major test, which will bring major changes. In the face of this test, countries of the world must respond to a series of questions. Do we embrace economic globalisation or reject it? Do we stay open or hide behind the closed doors? Do we work together or fight each other? Do we go for multilateralism or resort to unilateralism? I’m sure China and the UK will have the same answers to these questions. I’m confident that as long as we stand firm, come to each other’s aid, turn crises into opportunities and deepen cooperation, we will claim final victory over the virus and create a better and brighter future for our world.

Sir Sherard Cowper-Coles asks Ambassador Liu Xiaoming a series of questions during a CBBC webinar on May 5, 2020

Sir Sherard Cowper-Coles: People have been calling for an inquiry into the origins of the outbreak. What do you say to that?

China has been open, transparent and informed both the WHO and other countries with regards to the pathogen and genetic sequence. There is no cover-up, no hiding at all. We are transparent, we are open. That has been spoken of by the WHO, by their leading experts and scientists, and also by countries around the world, British scientists have confirmed this. Britain has said that due to early discovery of the virus and because of China’s sharing information very quickly and at an early stage, the world has time to study, to do research on a vaccine and to gain time for that. That has been fully recognised.

This inquiry, these noises and the so-called requests, mainly come from America and are also echoed by some Western countries, though very few. I think these calls are politically motivated while the international community is focusing on fighting the virus, whilst the virus is still ravaging the world, taking lives in many countries – especially the United States and also in this country. Instead of focusing on fighting the virus, instead of saving lives, they want to hold an inquiry. I don’t know. I think they have an ulterior motive. They want to pass the buck on their lack of response, lack of work and effort to contain the virus – to China. It’s a blame game, scapegoating. It’s not helpful for an international response to this virus.

With regards to the origin, it is up to the scientists. This is a matter for science. It is not for the politicians to decide. Politicians should be focused on how to mobilise the country to fight against the virus. We should trust scientists and doctors – the experts – in their search for the origin of the virus. Of course, every country should reflect on its response’s effectiveness. No country is perfect. But this is not the time for this. We also admit we can do even better. We are open and transparent with regard to how to draw lessons from the response to the virus. We can compare notes with other countries – we did as a matter of fact. We are open and transparent. That is different from the politically motivated calls for a so-called inquiry.

People are asking about the movement of people between the UK and China, are travel restrictions going to relax? 

Our top priority is to keep the virus under control. There are more concerns now about imported cases so we still have to be vigilant about them to make sure there will be no rebound or second wave. We still have to guard against this. The measures and restrictions are still in place, but it is improving and loosening as the situation improves.

I believe as the situation improves with regards to control of the virus, that the travel situation will get better and be improved. I just heard that the confirmed cases in China now is below 500. As we have more good news like this, the more we can relax restrictions.

Prior to the pandemic, there were 200,000 Chinese university students in the UK. Might students in China now be worried about coming to study in the UK?

 I agree with you that education is an important sector linking our two countries. The UK is the largest Chinese student group in Europe and second in the world.

There was a lot of concern at the beginning of the outbreak among Chinese students. I had several online webinars with students across the UK. The Chinese government is very much concerned about the health and safety of Chinese students. President Xi Jinping said on a number of occasions that we attach great importance to the safety and health of Chinese living overseas, especially Chinese students. In addressing our concerns our government provided what we call a ‘health package.’  I did a presentation ceremony at the embassy and we reached out to 100,000 Chinese students who remained in the UK. We also worked with the aviation authorities in China to arrange a charter plane to take back some young pupils who were dependent on British families for their weekends and spring break.

I’m still confident that the basics, the fundamentals of education collaboration between the UK and China are still there. It’s just a matter of time. The situation is not very encouraging here in the UK but still, we received many enquiries from students and their families about future enrolment in British schools.

In the past weeks, I wrote letters to 154 vice chancellors of 154 universities that home Chinese students. While expressing my concerns about their safety and the health of these Chinese students, I encouraged the school authorities to take good care of them and also expressed my commitment, our commitment, to stronger relationships between Chinese universities and British universities. I believe the fundamentals are still there and once the pandemic is over we can resume our cooperation so we still keep close contact with the universities.

My embassy education section keeps very close contact with over 100 British universities. I myself also keep close contact with the secretary of education of the UK government and with the Director General – we exchange letters about how China and the UK can strengthen education cooperation.

Ambassador Liu Xiaoming during a recent CBBC event

When talking to Chinese investors in the UK, what do you say to reassure them, given some of the British voices in politics and the media who are critical of China?

First, we have to separate the official position of the government and the broad consensus among UK society towards China. So when you say there is a lot of anti-China rhetoric, I do not believe it represents the UK government’s position. They do not represent the broader consensus among the businesses in the UK, including CBBC and CBI, and I believe that the UK government under Prime Minister Johnson are still committed to a stronger relationship with China. In his two telephone conversations and his exchange of letters with the Chinese leaders, Prime Minister Johnson reaffirmed his government’s commitment to a stronger relationship with China, to a golden era with China.

I believe the business community here in this country also welcomes Chinese businesses, and supports stronger partnerships with China, so I’m not worried. When asked this question on Hard Talk, whether I am concerned about China-UK relations, my answer was yes and no. When I say yes, I am confident that we can work with the UK government across the board, in addition to joining the fight against the virus. Also, we have a busy agenda in front of us laterally and multilaterally, and I engage very actively with the business community. The education sector is another area. Even when it comes to the media, I think they are not all bad. At the beginning I read some balanced reports about China’s fight, China’s sacrifices, China’s service to buy the world time and to make enormous scarifies in many media. But once the Americans started this campaign of disinformation, some media followed suit. They dance to the tune of some American politicians and American media. Maybe there are some connections, culturally, I don’t want to be that critical. I do not want them to be friendly towards China, I just want them to be balanced and objective in their reporting of China.

But I agree with you. These kinds of noises – and there are also some from politicians – but they are few and I do not believe they represent the government position. They do not even represent the parliament. I think the main theme of China-UK relations is partnership, cooperation, friendship. This Cold War rhetoric doesn’t represent the mainstream of today.

We are now seeing a return of supply, but how do you see demand returning (both inside China and in China’s overseas markets). Will it slow the economic recovery?

Everyone agrees that the epidemic has had an impact on China’s economy. Not just on China’s domestic economy but also trade investment as well. But the government attaches great importance to the recovery of the economy.  Even before we had the epidemic under complete control, President Xi said we were fighting on two fronts: One, against the virus; and two, resumption of production of the economy.

The government has introduced many measures, including what we call ‘six stabilising measures’ and ‘six protection measures.’  The six stabilising measures are: to stabilise employment, financial markets, foreign trade, trade, FDI, and expectations. Measures were taken to protect: employment, basic livelihoods, market entities, food security, stable industrial supply chains, and normal operations of grassroots communities. These measures are already showing effectiveness. We are still committed to deepening reform and opening up. The foreign investment law has taken effect as of the beginning of this year.

Many new laws and regulations which open the market wider to the rest of the world – especially in the financial sector and insurance. – these offer a lot of opportunities for UK businesses that have strengths in legal, financial and insurance services. There will be more pilot free trade zones. So there are a lot of measures which are preferential to foreign businesses.

What digital changes will we see and what can we learn from China’s highly digitised approach to business?

The digital economy has a huge potential for cooperation between China and the UK. In the first quarter of this year, although the Chinese economy contracted by 6.8 percent – the lowest since 1992 when we started the statistics – the digital economy showed strong growth. On average, it increased by 20 percent in online sales, online business and the digital economy. The UK is the inventor of the Internet and has cutting-edge strengths in AI and many areas. China and the UK should work together in this sector as well. There are many UK companies already operating in China who know well how to work. But I would say China offers a huge market. Many people focus on China as the factory of the world – and yes we are the largest producer of many products and it will continue to be that way – but you have to remember that China is a huge market. It is the second-largest consumer country in the world and very soon will be the largest in the world. So the digital economy has enormous opportunities and great prospects for China-UK cooperation.

Will China continue with investment in China’s large projects such as the gigabit economy, HS2, HS3 and other projects?

We encourage more collaboration between different regions in China and the UK. If it weren’t for Covid-19, we would have a regional summit involving about 700 local leaders. This event was supposed to be held in Birmingham in February with John Peace, Chairman of the Midland Engine, and the Chinese embassy setting up this conference. There is enormous interest back in China. There are complementary features between the two countries. The UK has The Northern Powerhouse and the Midlands Engine. We have the Greater Bay Area, Jingjinji Economic Zone the Yangtze Economic Belt, so we can dovetail the different strategies. And you are right that Chinese businesses are very ambitious about making new efforts outside of London and they have been successful in this respect.

In March, during the high time of the pandemic in China and at the start of the outbreak in the UK, I attended the acquisition event of British Steel by Jingye, a Hebei factory. That was a good example of Chinese business’ commitment to the UK market, despite Brexit and Covid-19. I was joined by Secretary Sharma, we spoke highly of this event. Jingye is not the largest Chinese steel company, but one of the most successful. As a result of the acquisition, they not only saved 3,200 jobs, but also they have committed £1.2 billion investment over the next 10 years to upgrade British Steel. I think they will make a great contribution to the transformation and upgrading of the British steel industry. I heard their operation has now been affected by Covid-19 because of industrial supply chain problems, but they feel confident it will come around and they believe they made the right decision.

Ambassador Liu Xiaoming with HRH Queen Elizabeth

Does China understand the recent requests to strengthen national security controls on investment into the UK?

I understand that every country has national security to take care of. Not only here but also in China. National security is a top priority of the state of the national government. It has to be, whatever policies or laws will be passed, it has to be fair. You can’t single out China as a target for a security threat. That is unfair and it will send out a very bad message not only to China, but to the world.

We understand that the world has become more globalised and people have new concerns about security, but it has to be indiscriminate, it has to be transparent, it has to be fact-based, it has to be fair. The UK is known for its free, transparent, business-friendly environment. The last thing I would like to see is the UK scare away foreign or Chinese businesses by strengthening so-called security measures about foreign businesses.

The climate conference COP26 has now been postponed, but will cooperation between China and the UK on climate security continue? It has been said that there are few global problems that can be solved without the participation of China and dealing with climate change certainly is one of them.

China is committed to environmental protection and committed to the Paris Agreement. We have faithfully implemented our obligations and are very much a contributor to world efforts with regards to climate change. 2020 is supposed to be remembered as a collaboration between China and the UK in environmental protection and climate change. Because our two countries are planning to host COP26, we have a very close collaboration and our new Minister of Environmental Protection, Minister Huang, looks forward to engaging with secretary Sharma. I have had several exchanges with secretary Sharma, with regard to how China and the UK can work together to make these two conferences – the COP15 and COP26 – a great success, and not only for the benefit of the two countries, but also to show our leadership in this very important area.

When we talk about Covid-19 we have to think in the long term how we make this world a better place. Although it has been postponed, our two governments remain in close contact, the working groups are engaging with each other and we look for more productive and active engagement with the British team. Once the pandemic is over we can resume our work and carry on our efforts.

What might the Healthcare Silk Road mean for Britain?

PPE and ventilators are just one part of our collaboration. I am very pleased that even during the two telephone conversations between President Xi and Prime Minister Johnson, in addition to focusing on the current fight against the virus, they also talk about the importance of collaboration between the two countries on science, and joint efforts on the vaccine, medicine. They expressed support for scientists to work together in this area. Also on a ministerial level, secretary Matt Hancock is in close contact with his counterpart Minister Ma. In addition to telephone conversations, they have an exchange of letters to express their views on how to deepen the collaboration between our two countries bilaterally and also multilaterally.

On the government level, at a policy level, we have very close communication, and on the ground, we have this mutual assistance and support in providing medical suppliers – ventilators, PPE – and also we share experience and we share the success of the treatment cases. One Chinese medical team was here in the UK and they had online calls with their British counterparts. Scientists at universities and companies like GSK and others are working with counterparts in China to find a vaccine. At the end of the day, I think it will be a vaccine that will provide the final solution.

In the international arena I think China and the UK are good partners. We both support the important role played by the WHO and both support the international response and improvement of global public health. Yesterday in a conference hosted by the EU and the UK, our EU ambassador Zhang Ming spoke highly of the efforts of the EU and Britain and other countries and reaffirmed our commitment to the international effort and our support for developing countries. In the public health area, China and the UK have a lot to cooperate on.

This transcript has been lightly edited for clarity

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