How long have you been dealing with China, how did it start and how has it evolved?

At Manchester City, we have had a fan base in China for many years and it has always been a market we’ve been keen to have a presence in. More recently, with President Xi’s widely stated ambition to develop grassroots football in China, which we were fortunate to hear first-hand when he visited the City Football Academy in Manchester, we saw an opportunity to participate in that movement and have a more permanent and sustainable presence in China.

In the past few years, we have seen City Football Group’s presence grow in China. We had a minority shareholding investment from a China Media Capital-led consortium in 2015, opened offices in Shanghai and Shenzhen, and now have commercial and media partnerships and coaches operating in schools across the country as part of Ministry of Education Programme. Most recently, along with our partners UBTECH and China Sports Capital, we were excited to fulfil our ambition of acquiring a Club in China, Sichuan Jiuniu FC.

With President Xi’s widely stated ambition to develop grassroots football in China we saw an opportunity to participate in that movement and have a more permanent and sustainable presence in China

How did the purchase of Sichuan Jiuniu FC come about and how will it work with the partners UBTECH and China Sports Capital? 

It’s no secret that we had been looking for an opportunity to be involved with a club in China for some time. Fortunately, we already had a relationship with China Sports Capital and UBTECH. We considered lots of other opportunities, but this one felt right for all of us, and fortunately, we were able to move forward with it. We are now focused on building and developing the Club to improve its performance on and off the pitch.

There has been a gradual swing from British companies investing in China’s infrastructure such as sports academies to Chinese investment into British football clubs and now, with this project, we see a British club investing into a Chinese club. What is next for UK-China football trade?

We look at it more in terms of global football. At City Football Group, we are invested and operating in the UK, US, Australia, China, Japan, Singapore, UAE, Spain and Uruguay. Within that, we see China and the US as significant football markets which still have huge capacity to develop and grow, so we believe there will continue to be more opportunities ahead.

Scott Munn CEO of City Football Group

Why is it important that City Football Group gets involved with China and what are the long term aims and goals?

We are committed to participating in the growth of football in China. We want to do this in a long-term and sustainable way and we believe the opportunity to grow and develop. Sichuan Jiuniu provides exactly that potential, in a significant city which loves football.

There are clear commercial goals of attracting sponsorship and investment as well as a new generation of fans but are there on field aims – such as player exchanges or recruitment ambitions?

All our investments are primarily football ones. We want to grow and develop successful teams which play an attractive style of football, engage their fans and play a key role in their local community. We believe if we can get those things right, other opportunities will follow.

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From all-star players transferring to Chinese teams to President Xi’s high profile visits to Premier League clubs, the Middle Kingdom’s growing relationship with English football often makes headlines. Most recently, in February, City Football Group (CFG), the parent company of Manchester City, purchased Sichuan Jiuniu, a Chinese club based in Chengdu.  The company’s Chief Executive, Ferran Soriano, said “China is an extremely important football market, which we have been focused on for some time. We believe strongly in the future of football in China”.

Ferran and CFG are in good company. Their investment follows the lead of other top clubs, like Liverpool FC, who offer coaching and player training in Kunming through their international academy program, and Manchester United, who next year plan to open club-themed entertainment and experience centres throughout China.

Clearly China is a fast-growing market that is attractive to the big players. But it’s not just for Premier League clubs or even businesses that focus solely on football; opportunities abound throughout the sports sector. One example of a British SME that has broken into the market is the Cavendish Group.

Manchester City parent group CFG recently purchased Chinese team Sichuan Jiuniu

Cavendish has been operating in China since 2003, initially as a publisher of a bilingual magazine, and now as a host of conferences such as the International Capital Conference and Host City Asia. Ben Avison is their Editorial and Conference Director and first introduced a China-specific event in 2008 to coincide with the Olympic Games. “China’s sports and major events market is currently the fastest-growing in the world and [with] Beijing hosting the Winter Olympics in 2022, Beijing is the most important city in Asia right now”.

After initially engaging Chinese corporates by bringing them over to events hosted in the UK, Cavendish established a Chinese office to build a local team. Being a complex and rapidly developing country, they sought out experience on the ground. As Avison says, “strong personal relationships and respect for local structures are crucial and we have found our friends and colleagues in China to be extremely supportive in this regard.” This insight helped to establish Cavendish in China, which in turn has helped to raise its brand profile across the world more generally.

For British companies interested in China, there is an imperative to go but it’s not enough to simply survey the conditions on the ground. Foreign companies should recognise the need to be flexible and adapt to a very different market than at home. In many instances that means new products, in others, it’s about understanding how to market to local consumers.

You might be a big fish elsewhere, but in a pond of over 1 billion, you need to know how to differentiate yourself in the right way culturally

Future Lions is an international football academy that has been running programmes in Southern China for several years. Here in the UK, they use traditional social media channels like Instagram or Facebook to tailor messages to segmented populations but, after recognizing that the digital channels that they are familiar with have little or no reach in China, they embarked on learning about those that do. As Founder and CEO Ritchie Jeune says, “WeChat is effectively the be-all and end-all with our market space, somewhere where our existing knowledge was worthless.”

Part of localising is recognising the preeminent position of the government in China. There are benefits that come from local government support and from thinking about how to design services that can be seen as consistent with the aims of the national government in mind. In order to do that Ritchie and his team studied China’s 50-point football reform plan (published by the State Council in 2015) to better understand the state’s strategy for modernising football and how to better “build a long-term identity for Chinese football.”

For Future Lions, taking a long-term view has meant focusing on the grassroots development that is crucial to the reform plan. They have done this by hosting local events, sending coaches over to train unfamiliar PE teachers on how to teach the sport, and introducing football to students that previously may not have even kicked a ball. The goodwill and connections gained from supporting the government aims for wider engagement in football has led to a situation in which the government have been helpful to Future Lions.

This support has been crucial to entering the market commercially and ensures that Ritchie and his team are building a business that is responsive to local conditions and one that can grow and adapt as the country does. As Jeune says, “You might be a big fish elsewhere, but in a pond of over 1 billion, you need to know how to differentiate yourself in the right way culturally and believe in and understand your routes to market intensely.”

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To date, there is an enduring sense that there is significant disparity in government expenditure between the north and south of England. Whilst some argue that there are similar levels of public spending between the two, a recent report from the Centre for Cities think tank shows that cuts to public spending have hit the north hardest. In terms of economic growth, there is little doubt that there is significant variation, however. As an example, between 2004 and 2015, for every 12 jobs created in southern cities, only one was created in other regions.

It is against this backdrop that the UK government launched its Northern Powerhouse scheme in 2016, which aims to correct this imbalance by improving infrastructure, education and business opportunities in the north of England. However, it was believed that a sea change of this scale could not be enacted through domestic investment alone. This is where the role of Chinese funding, courted through successive ministerial visits between the two countries, came into play.

The greatest success story of Chinese investment in the Northern Powerhouse is arguably Manchester. Since the creation of the Manchester China Forum in 2013 by then Chancellor of the Exchequer, George Osborne, the city has done its utmost to attract attention from Chinese investors and tourists, and its efforts have paid off.

Its most recent achievement was the creation of a direct flight route between Manchester and Beijing in June 2016, which has seen the volume of passengers travelling between the cities increase by 80 percent in just two years. In fact, of all the routes that have operated between the UK and China for a year or more, the Manchester-Beijing route has undergone the fastest growth, carrying around 175,000 passengers in its second year. The route has also enabled an increase in exports from the airport itself, with Manchester’s share of UK exports to China increasing from 5.7 percent to 11.5 percent since its inauguration.

An obvious beneficiary of such a development is Manchester’s tourist industry. For the past 12 months, although Chinese tourists have spent a total of £198 million in destinations across the world, their average spend per trip has been flat-lining. Yet against this backdrop, the North West has seen a 94 percent increase in spend per trip over the same period, revitalising parts of the local economy and bringing new customers to shops, restaurants and attractions across the region. Indeed, a total tourist spend of £260 million, a goal originally envisaged for 2026, has been reached in just two years. Manchester’s recent success can be attributed to its canny marketing: look no further than its dedicated guide to local attractions and eateries available for download from WeChat, a sure sign that Chinese visitors specifically play a key role in the city’s development strategy.

Regeneration was certainly the first wave of major Chinese investment into the region, however, as China seeks to move up the value chain, it is now in the innovation and high-tech space

“We take a holistic view of the relationship and engagement with Mainland China – not just the commercial relationship but the cultural, educational, social and, importantly, political elements too,” says Rhys Whalley, Executive Director, Manchester China Forum. “We’ve seen significant growth in the last few years of both interest levels and investment. To date that has largely manifested in regeneration and development, with over £7 billion of gross development value,” he says.

“Investment in Middlewood locks has a gross development value of a billion pounds, and they have also secured high-end residential projects in Wirral called Lexington,” says Whalley. “Landing in one part of Northern Powerhouse leads into growth and expansion into other areas,” he points out.

Since 2016, the Beijing Construction Engineering Group (BCEG) alone has poured £2.6 billion worth of projects into the region, including £1 billion for the proposed development of Airport City – a mixed-use space comprising offices, retail and leisure opportunities. A joint venture between BCGE, what was Carillion, and the Manchester pension fund separated it into accommodation clusters dubbed “Shenzhen Gardens” and “Wuhan Square”, a clear indicator of who the developers have in mind as potential backers for the project. BCGE, who recently won the Chinese Investor in the UK award at the British Business Awards, has also invested elsewhere in region and grown from two or three staff four years ago to over 90 people today.

Clare Bailey, Associate Director of Commercial Research at the global real estate services provider Savills, believes that the development of Airport City exemplifies the potential for joint ventures to attract Chinese companies to the region. Not only can China play a significant role in the development of Greater Manchester, she argues, but it is also central to the Northern Powerhouse initiative in general. “Since its launch in 2013, the Manchester China Forum has driven forward the city’s engagement with China, including a surge in inward investment, improved connectivity, and the visit of President Xi Jinping. Chinese investors are now involved in over £3 billion of development across the city.”

By all accounts, this is just the beginning for the city’s Chinese strategy. In 2017, the Manchester China Forum launched the third edition of its investment portfolio, which represents a concerted effort to attract Chinese funding to the region. According to the Forum, among the city’s attractions are its robust economy, which shows the ninth best performance in Europe, its £7.7 billion manufacturing industry, and its 40 percent lower cost for business administration when compared with London. What’s more, the council plans to build 220,000 new homes and create 100,000 jobs in the Greater Manchester region by 2040, and Chinese investment will be crucial to this bid for growth.

Regeneration was certainly the first wave of major Chinese investment in to the region, and one that will no doubt continue. However, a trend that is reflected nationally and internationally as China seeks to move up the value chain and secure more strategic and sophisticated investment is in the innovation and high-tech space.

“We are seeing that in mergers, acquisitions, partnerships and strategic investments into smaller start-ups and SMEs by some of the major Chinese players who are viewing Manchester and the Northern Powerhouse as a key next stage of growth outside of the capital,” says Whalley.

The Northern Powerhouse is a vision championed by former Prime Minister David Cameron and his Chancellor George Osbourne, and there has been reflection and questions asked as to whether there is still the same level of buy in and political good will for the progression of the Northern Powerhouse agenda. “Much of the noise around that probably reached a natural point of transition, where local government leaders could take ownership and translate beyond the branding exercise and into practical terms of what that looks like,” says Whalley.

He points out that at the heart of the Northern Powerhouse was the vision to get further much-need investment into infrastructure in the region. “If you compare per capita levels of investment in the north compared to the capital it is behind,” says Whalley. “It suffered from underinvestment for long periods; we need to up our game in terms of investment and it’s about how we bring these cities closer together,” says Whalley. “How to reap rewards in the same way Chinese cities have over the last ten years since the Chinese government has pushed investment in infrastructure.”

Although the pace of approvals and the different types of governmental policies between the two countries mean partnerships are essential, the Chinese expertise in urban infrastructure provides a great opportunity for Chinese partners to get involved in that vision.

Manchester – China Stats:

There are around 6,000 Chinese students in Manchester, with approximately 70,000 students in the Manchester Consulate district

There are over 30,000 Chinese people living in the city

Chinese investors involved in >£6bn of development across Greater Manchester

Export figures from Manchester Airport to China grown 41 percent to £1.29bn over last two years – bucking national trend where values fell by 30 percent

Manchester-Wuhan Sister City Agreement signed in 1986

PR Chinese Consulate established in Manchester in 1986

Manchester China Forum established in 2013

Presidential Xi Jinping visit to Manchester 2015

First direct flight to mainland China June 2016

Read more about China’s investment into the Leeds City Region

Read more about China’s investment into the North West

Read more about China’s investment into the North East

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