Chinese investors are uneasy following the UK’s June 23 decision to leave the EU, says Linda Yang, partner and director at Yingke International, China’s largest law firm. Yingke employs more than 4,000 lawyers internationally and represents more than 18,000 Chinese and international investors in both the private and public sector.  

“The result of the vote was really a surprise for most of our clients,” said Ms Yang. “Most investors expected the UK to remain in the EU, and the UK has always given China a good market economy position. Many investors feel there will be a very negative impact, because if the UK exits the EU, they will have to move their investments to another country to access European markets.”

It is not all bad news, however: only certain industries would be affected, says Ms Yang, particularly manufacturing. “For our clients talking about investment in the UK, attitudes differ, mainly based on the industry and purpose of the investment,” she said. “Leaving will mostly affect the manufacturing industry, because investing in an EU country means having access to all EU countries and having free flow of products without extra tax. Investors are now more hesitant about the UK.”

Acquisitions, especially in the advanced technology industry, are not likely to be affected, Ms Yang notes. “For high-tech acquisitions, the investor’s aim is the technology itself – and if the tech company is a UK company, there is no impact because this sort of investment doesn’t rely on the EU market,” she said. Acquisitions related to technology are increasingly important for Chinese investors as the country slowly moves from its manufacturing-based economy to a more advanced industry- and services-oriented one. “There are many UK companies with very advanced technology, and the main aim of such acquisitions is to introduce the technology to China to upgrade the industry and for export synergy,” said Ms Yang.

Another view

Meanwhile, Denise Li, CEO of Shanghai-based private equity firm PGC Capital, which filters Chinese and Taiwanese wealth into UK real estate projects, is upbeat about the UK’s future. “The UK will always be a sophisticated and well-developed nation whether or not it is in the EU,” she said. “My confidence and enthusiasm to do business with the UK remain undiminished.” PGC Capital has most recently invested in multi-million pound luxury apartment complexes in the UK’s second-biggest city, Birmingham.

Between May 2006 and May 2016, greenfield investments monitor fDi Markets recorded a total of 188 FDI projects from China into the UK. These represented a total capital investment of $11.82bn and the creation of 21,367 jobs. The greatest numbers of projects were in the financial services, software and IT services, business services, communications, and electronic components sectors, while the highest valued projects in terms of capital expenditure were in real estate, totalling $4.3bn. The most jobs were created in real estate, hotels and tourism and automotive OEM.   

Asked about her clients’ intentions to move their operations out of the UK, Ms Yang says that so far this has not started happening. “We haven’t heard about moving from clients, but it is really based on industries – if investors already have business in the UK and if the business is manufacturing to cover all of Europe, these investors will seriously consider moving their plants to other countries.”