Grant Thornton’s Tou Ying Tracker shows Chinese companies continue to make important contribution to UK economy

The fifth edition ofthe Grant Thornton UK LLP Tou Ying Tracker, which identifies thefastest-growing Chinese companies in the UK, finds that they continue to makean important contribution to the UK economy. Last year the top 30fastest-growing companies employed more than 5,000 people, had an average growthrate of 129% and recorded a combined turnover of over £11 billion.

The tracker, developedin collaboration with China Daily, analyses Chinese investment in the UK in twoseparate categories: state-owned enterprises (SOE) and private companies, with15 of each category making it into this year’s report.

The latter groupreflects the ever-changing nature of Chinese overseas investment and the growthof China’s thriving private sector. The private Chinese-owned companies in thisyear’s tracker grew by a remarkable 71% on average but SOEs outperformed eventhat, achieving an average growth rate of 174%.

Eleven new SOEs enteredthe 2017 tracker. Access to cheap government finance means they have beenprotected to a certain extent from commercial pressures, evidenced by ten ofthe 15 SOEs included in the tracker achieving triple digit growth over the pastyear. The state-owned China National Offshore Oil Corporation (CNOOC) is thefastest growing company, recording a growth in revenue of 809%.

Simon Bevan, Head ofthe China Britain Services Group at Grant Thornton UK LLP, commented: “Chineseinvestors continue to look overseas to achieve their growth ambition. For many,the UK remains one of the most attractive investment destinations with thestability of the UK’s economic, legal and political institutions being a majordraw.

“Investing in the UKgives Chinese investors access to UK brands, technology know-how, managementexperience and global connections. Many businesses that come here use theknowledge acquired though UK investments to develop new and existing businessesboth at home and elsewhere in the world.”

This year’s trackerfinds that the fastest-growing SOEs continue to concentrate in the financialservices and energy and utilities sectors; allowing them to generate long-termsustainable returns and gain valuable experience in operating infrastructureprojects.

Private companieshowever are investing more broadly. Six out of the 15 included in this year’sreport operate in the technology, media and telecoms sector. Travel andhospitality and manufacturing are the next most popular sectors.

Brexit and the future of Chinese investment

This year’s trackerindicates that the UK’s vote to the leave the EU does not appear to havedampened China’s interest in the UK. Chinese investors have taken advantage ofthe fall in the value of the sterling to snap up a range of UK assets atreduced prices.

The longer term impactof Brexit is still unclear though, with future trading agreements between the EUand the UK yet to be agreed, but it seems unlikely Chinese investors willcontinue to be able to use the UK as a springboard for wider investment in toEurope.

Simon Bevan added:“Despite these concerns, the Chinese government continues to be extremelypositive about the future relationship between China and the UK. Around £1.4billion of commercial deals were agreed at the last UK-China summit, while anew UK-China trade group has begun laying the foundations for a deeper tradingrelationship. With 2017 hailed as the year that consolidated the ‘Golden Era’of UK-China relations by China’s Ambassador to the UK, it is clear that theirinterest in the UK is set to continue.”

For a full copy of thereport please click here.