The Brexit vote has amplified the incentives for UK companies to look further afield than established EU economies – and not a moment to soon.
The level of trade with Asia is currently lagging. The EU remains by far the UK’s largest trading partner – China, Asia’s largest market, is only fifth. The “golden era” of economic ties between the UK and China hasn’t yet been realised, offering untapped potential.
Asia Pacific more broadly is an attractive option for UK businesses looking for faster paced growth prospects. China’s Belt and Road initiative has inspired investment, but there are many opportunities yet to be explored.
The British government has been on the front foot. Theresa May’s recent visit to China and the upcoming GREAT Festival of Innovation in Hong Kong, backed by PwC, both demonstrate our government’s desire to identify opportunities to do more business in the region. The festival will link government, business, higher education and research to discuss how all areas of life are being transformed by radical new innovation and technology.
This could not be better timed – now more than ever, the eyes of British businesses should be turning east. On the global stage, Asia has become a star performer for economic growth. The IMF predicts that real GDP in Asia will increase by 5.5 per cent in 2018, compared to 1.5 per cent in the UK. PwC’s World in 2050 report estimates that Asia will grow ahead of the EU and the US in the long term – its appeal looks set to stand the test of time.
Understanding the business landscape in the region is crucial to realising potential opportunities. Optimism and openness to expansion are high.
According to our latest CEO Survey, 44 per cent of chief executives based in Asia Pacific are very confident about their own growth prospects over the next 12 months, compared to 34 per cent in the UK and 42 per cent globally.
Appetite for new business opportunities is also evident, with more than half of these chief executives planning new strategic alliances or joint ventures to drive growth and profitability this year, while 42 per cent are looking for new mergers or acquisitions.
As for finding these partners, UK companies are well-matched in terms of shared priorities and concerns.
Digital innovation is high on the agenda. Over half of Asian chief executives are extremely concerned about the speed of technological change, while 84 per cent are concerned about the availability of digital skills among their workforce.
In the UK, business leaders are also are acutely aware of the disruption emerging technologies, such as artificial intelligence, blockchain and robotics, could cause, with 69 per cent agreeing that emerging technology and automation will disrupt their business over the next five years. Working together to tackle these challenges would be mutually beneficial to both the UK and Asia Pacific – not all solutions need to be homegrown.
Collaboration doesn’t just apply to big established businesses. There are opportunities for SMEs too, with 33 per cent of Asia Pacific chief executives looking to work with entrepreneurs and startups in the next 12 months.
The GREAT Festival offers UK businesses a golden opportunity to discuss how the fourth industrial revolution could affect the future of business with leading counterparts, experts and potential trading partners from across Asia. Taking place from the 21-24 March 2018, the festival will bring innovative, entrepreneurial businesses together to discuss shared challenges and opportunities, and help each other become disruptors before they’re disrupted.
Partnerships across business, education and politics will be crucial to securing a prosperous future relationship between the UK and Asia Pacific. Business to business conversations can only go so far. The fact that the government is already creating a dialogue in Asia shows that politicians are taking this seriously, and should stand the UK in good stead when trade negotiations can at last begin.