Out-Law News 2 min. read

Expect technology-focused investment announcements from Chinese president's UK visit, says expert

Technology-related infrastructure and research projects in the UK can expect a considerable share of an estimated £105 billion investment from China and Chinese companies over the next decade, an expert has said.

Andrew Hornigold of Pinsent Masons, the law firm behind Out-Law.com, said that it was "highly likely" that Chinese president Xi Jinping would discuss opportunities in the technology sector during this week's state visit to the UK. Chinese technology companies are experiencing an "unprecedented" period of growth, while technology-related outbound investment was in line with the Chinese government's policy objectives, he said.

"Alongside investment into major infrastructure projects in the UK's rail and energy sectors, Chinese investment into Britain will focus on hi-tech, IT, research and development as this will facilitate the implementation of another important Chinese policy, 'Made in China 2025', which aims to move China's manufacturing base up the value chain," Hornigold said.

"There's no doubt that Chinese technology companies are looking to invest in innovation and entrepreneurship. The Chinese president's 'One Belt, One Road' initiative is sending a clear message for Chinese companies to 'go-global'. The UK is in many ways the most pragmatic of China's partners in Europe, as demonstrated by its willingness to join the Asian Infrastructure Investment Bank before other European countries earlier this year. And we have already seen commitment from China into the UK's tech sector – one of China's leading global information and communications companies, Huawei, continues to invest in research and development in the UK, as part of the firm's $2bn investment commitment to the nation," he said.

China is already home to the world's largest mobile and digital markets, including some of the world's leading technology companies such as Baidu, Alibaba and Tencent. The country's total ICT market is expected to exceed £100 billion in value by 2020, according to Pinsent Masons.

Research by Pinsent Masons and the Centre for Economics and Business Research (Cebr), published last year, indicated that China and Chinese companies could invest around £105bn into UK infrastructure by 2025, much of which would be driven by an increase in joint ventures between UK firms and their Chinese counterparts. Although the leading recipients of this investment would be energy, real estate and transport, based on the UK's infrastructure priorities, China's own transition to a service-based economy would boost investors' interests in innovation.

"Pinsent Masons' 'China Invests West' report found that as the Chinese economy matures and the services sector gains more importance, foreign investments will increasingly aim to satisfy the search for long-term yields and the acquisition of know-how and innovation to help China make the transition into an advanced economy and for its businesses to move up the value chain," said Hornigold. "This means that future investments will be more heavily directed towards opportunities and innovative companies within advanced economies, such as the UK."

"It's not just large Chinese tech giants looking to invest in the UK. Beijing-based Rekoo opened a new office in London's 'Tech City' in 2013. London for Chinese companies could act as a springboard into untapped European opportunities - the Chinese will be keen to partner with UK tech counterparts through joint ventures and strategic alliances when entering European markets. They will need UK know-how not only in tech innovation, but on how to navigate and comply with EU regulations and laws," he said.

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