Grant Thornton 投英Tou Ying Tracker 2014: Chinese companies continue to make their mark in the UK

The Grant Thornton 投英 Tou Ying Tracker 2014, developed in collaboration with China Daily, identifies the top 25 fastest-growing Chinese companies in the UK as measured by percentage revenue growth year-on-year, based on the latest published accounts filed as of  23 October 2014.

Our Tracker shows that the top 25 Chinese companies in the UK develop rapidly and continue to prosper, making great contribution to the economy of the UK. The total annual income of these companies exceeded £25 billion in 2013, up from £17 billion in 2012. Overall growth of the top 25 companies in 2013 was a stunning 38% versus 27% in the previous year. Even the lowest growth rate among the Tou Ying 25 was an impressive 8%. Meanwhile, Chinese businesses are also making a substantial contribution to UK employment, with a total of over 4,000 people employed by the Tou Ying 25, compared to 2,600 in 2012. UK has been seen as a destination of overseas investment by China.

Compared with last year, thirteen new entrants make the Tou Ying Top 25 this year, many of which are relatively new arrivals to the UK. As in the past, the manufacturing and financial services sectors dominate the list, closely followed by tech, media and telecoms. Alongside these new entrants, this year’s Top 25 nonetheless contains a number of well-established companies in the UK demonstrating similarly impressive growth rates, such as Sinochem Europe, Bank of China, China Telecom, China Unicom and Huawei Technologies. In terms of the investment region, our 2014 Tracker shows a shift back to a greater concentration on London and the South. Our tracker shows the resurgence in M&A activity in the UK. The Top 25 includes ten companies that are the result of past acquisitions compared to just five last year.

The Trackerdemonstrates the changing pattern of Chinese investment in the UK. China shiftsthe focus from brand acquisitions to internationalizing its own businesses. Agreater emphasis on infrastructure and business support demonstrates a keenappetite for investing for the long term. In terms of the nature of thecompany, more and more China’s private companies become more mature andinternationalize its own businesses. They are aligning their business practiceswith their European peers to compete on the global stage.

Xu Hua, CEO of Grant Thornton China, says: “AsChina is shifting to a knowledge economy, its complementarity with the UKeconomy increases. We expect several key themes from this year’s tracker tocontinue in 2015 with the growing maturity of UK-based Chinese businesses. Webelieve the investment of Chinese companies will continue to increase. Theirstronger competitiveness in European market supports them to compete with theirEuropean peers on the global stage.

The UK is anincreasingly popular destination for Chinese companies wanting to set up officesand expand globally. In addition to the obvious benefits of time zone andlanguage, the UK boasts an attractive tax regime for overseas investors. The corporationtax rate of UK is 21% currently and will drop to 20% from April 2015. The UKGovernment has also taken steps to attract emerging enterprises through R&Dtax credits and its patent box regime. A relaxation of the immigration and visaprocesses for those coming from China to the UK has also increased theattractiveness of doing business in the UK.

Xu Hua says: “Legaland cultural are the obstacles to Chinese investors in Europe. Labor laws,human resource costs, and immigration rules are the biggest obstacles tooperating in Europe. But we found these obstacles are diminishing. The UK haspositioned itself as well and truly ‘open for business’ to foreign directinvestment, and, as a result, has become a favored destination for Chinesebusiness compared to some other major markets.”

For more information, please read the full report.