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Essay: Current & future prospects of the UK/China to attract foreign companies

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  • Subject area(s): International Relations
  • Reading time: 5 minutes
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  • Published: September 21, 2019*
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  • Words: 1,244 (approx)
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  • Current & future prospects of the UK/China to attract foreign companies
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England and China are the fastest growing economies and world’s largest destinations for doing business aboard. The aim of this essay is to explore the current situation and future prospects of the UK and China to attract foreign companies

According to the World Bank survey, the United Kingdom has been ranked on top in the European countries in terms of ease of doing business. The country also occupies the fourth rank for ease of doing business in the world; the lucrative business environment and competitive tax rates of the UK attract the world’s most renowned developing companies. As the country moves forward with the Bruit, Chinese companies may seem more risk doing business in the UK. The country has a plan to exit the Europe Union in the near future; many countries including China have seen Bruit as a constraint or barrier to enter the UK market. In the uncertain times, the world organizations and firms will consider many political, economic, and ecological factors to consider the UK a prime destination to do business (China, 2006).
During this period of bruit, not only the trade talks between the other nations and England are prohibited, but the UK’s bargaining point will be determined by outcome of its trade deals with the European Union. The relationships of the UK with the European Union and its trade terms will set the foundations for other countries including China to enter the country for business ventures. Therefore, if England retains the full access to the EU market, the country can easily become a backdoor for the chins exporting companies the successfully enter the European market. Therefore, both china and England can expect foreign investment barriers due to political issues surrounding both countries (Collins, 2019).

The experts predict that between China and the UK uncertainty may prevail regarding the future and status of investment in the UK because of the EU-UK trade status (China, 2006). In the United Kingdom, the corporation tax is the lowest at 20% which will be decrease up to 100% related to research and development purposes. Moreover, the taxation rate on patents is only 10% at the moment; due to disparate laws and uncertainty, foreign companies may find it complicated to do business in the UK. The red tape of the country can also pose challenges in the way of foreign investment and business promotion; therefore, the potential implications of Bruit will be a permanent challenge for the countries to enter the UK for business prospects (China, 2006).

The taxation system in the UK is tricky as it takes 110 hours per year to complete tax obligations. The legal system of the UK is developed and it takes 440 days to enforce a contract. However, it takes some time to develop in depth understanding of the UK’s business culture and proceedings. Reaching a decision can be a time consuming process; to do the business successfully, family ties, network with schools, and other cultural factors are most important to become progressive in the UK. (James, 2003).

Changes in the legislation and regulation may be deceiving in the UK. Many countries are concerned about the issues related to repeal of EU laws that make UK’s future a bit uncertain to predict. Political risks and political violence is also a threatening factor for the UK to get substantial business. The terrorist incidents and arena bombings have impacted the local businesses as well as foreign companies’ prospects to enter the country. (James, 2003)

Due to western democracies, political risk has always been with the UK. Brexit is the top risk in the UK with investments. The country might vote to leave the European Union and 40 years of harmonizing markets would have to be in vain. The administration of Donald Trump is another global and political challenge for the UK to attract investment. Trump has enforced many barriers to imports. With more Dutch and French elections to come, things could turn out real badly for the UK. Further bout of financial market turmoil can doubt the sustainability of the euro (Nader, 2014).

In addition to the UK, China can be a challenging and uncertain destination for doing business. The companies must understand the country’s banking, taxation, political , and legal system before starting the business, the biggest challenge include rigidity of infrastructure and labour markets. Corruption in china is also a major concern while the government is actively trying to improve the transparency of business. However, china is ranked 79 on the Transparency International Corruption Perceptions Index (Rimini, 2013).

Regional tensions in China create sensitivities in China for American, European, and Australian companies. Due to historical problems, china’s relationship with Japan is difficult. The political problems can be disruptive for the businesses entering china; rival territorial claims on South China Sea are other sources of tension between Vietnam, Philippines, and China. Political problems with Taiwan can lead to increased tensions in china to do business (Cook, 2003). The governmental regulations and controls on doing business in China can also vary in terms of location and industry. The government of China is complex. Moreover many companies will have to hire quality assurance experts for progress on the projects. Also, the intellectual property rights are difficult to enforce in china, companies are suffering many commercial losses due to problems in the area.

Collectivism has been an important element of chins people since the beginning, Chinese customers and partners may define values differently than other people, for many people individual accomplishments or desires will still be secondary to obligations. Since no organization in China is disconnected from the country’s politics, the business sector is somewhat unregulated. Therefore, the companies should consider how they will pay their taxes and how the government will affect their business outcomes. The companies can hire local partners who can better guide them related to obdurate cultural and political issues that may become hurdle for them. A skilled translator for example can help to navigate the complex world of Chinese business. Therefore, it is vital for the foreigners to study the political landscape of China to learn about the centralization in the economy.

Considering the similarities and differences between the two countries, the biggest challenge for both the UK and China is the Donald Trump administration and his decisions to get America back to the top of its economic game. Both countries can face several barriers to trade with America like Mexico and other countries. However, Bruit issue is solely going to decide the fate of the UK as it makes a decision to leave the European Union. China on the other hand, is facing its own political agenda and not dealing with the political risks due to its rigid policies and insensitive rules. Therefore, china and England both have to involve their leaders in creating strategies that can help to mitigate political issues with the rest of the world.

The companies can collaborate with long term goals in mind despite sensitive political issue in these two countries. The companies should understand the vision and values to make profits. They should also consider cultural differences important to have an impact on their company’s success and understand the new cultures. Moreover, respecting the Chinese and British view of the world and business practices can still help the companies build value.


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