The fifth edition of the Grant Thornton UK LLP Tou Ying Tracker, which identifies the fastest-growing Chinese companies in the UK, finds that they continue to make an important contribution to the UK economy. Last year the top 30 fastest-growing companies employed more than 5,000 people, had an average growth rate of 129% and recorded a combined turnover of over £11 billion.
The tracker, developed in collaboration with China Daily, analyses Chinese investment in the UK in two separate categories: state-owned enterprises (SOE) and private companies, with 15 of each category making it into this year’s report.
The latter group reflects the ever-changing nature of Chinese overseas investment and the growth of China’s thriving private sector. The private Chinese-owned companies in this year’s tracker grew by a remarkable 71% on average but SOEs outperformed even that, achieving an average growth rate of 174%.
Eleven new SOEs entered the 2017 tracker. Access to cheap government finance means they have been protected to a certain extent from commercial pressures, evidenced by ten of the 15 SOEs included in the tracker achieving triple digit growth over the past year. The state-owned China National Offshore Oil Corporation (CNOOC) is the fastest growing company, recording a growth in revenue of 809%.
Simon Bevan, Head of the China Britain Services Group at Grant Thornton UK LLP, commented: “Chinese investors continue to look overseas to achieve their growth ambition. For many, the UK remains one of the most attractive investment destinations with the stability of the UK’s economic, legal and political institutions being a major draw.
“Investing in the UK gives Chinese investors access to UK brands, technology know-how, management experience and global connections. Many businesses that come here use the knowledge acquired though UK investments to develop new and existing businesses both at home and elsewhere in the world.”
This year’s tracker finds that the fastest-growing SOEs continue to concentrate in the financial services and energy and utilities sectors; allowing them to generate long-term sustainable returns and gain valuable experience in operating infrastructure projects.
Private companies however are investing more broadly. Six out of the 15 included in this year’s report operate in the technology, media and telecoms sector. Travel and hospitality and manufacturing are the next most popular sectors.
Brexit and the future of Chinese investment
This year’s tracker indicates that the UK’s vote to the leave the EU does not appear to have dampened China’s interest in the UK. Chinese investors have taken advantage of the fall in the value of the sterling to snap up a range of UK assets at reduced prices.
The longer term impact of Brexit is still unclear though, with future trading agreements between the EU and the UK yet to be agreed, but it seems unlikely Chinese investors will continue to be able to use the UK as a springboard for wider investment in to Europe.
Simon Bevan added: “Despite these concerns, the Chinese government continues to be extremely positive about the future relationship between China and the UK. Around £1.4 billion of commercial deals were agreed at the last UK-China summit, while a new UK-China trade group has begun laying the foundations for a deeper trading relationship. 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 their interest in the UK is set to continue.”
For a full copy of the report please click here [ 801 kb ].