David Cameron in China: Keeping the British end up? Or just a waste?
The Prime Minister is leading the largest ever trade delegation to China. But what value do these junkets really deliver?
The choreography of the modern trade mission is familiar. There's the photo opportunity on the steps of the plane, the press conference and then the official dinner. Several days of frenetic travel across multiple cities are punctuated by much pressing of flesh and then it's back home – until the next expensive junket. But what do these caravans of political and commercial clout really achieve? Does the modern trade mission do any good?
Some might say that the results are obvious. In October George Osborne gave the green light to the deal allowing Chinese firms to invest in the Hinkley Point nuclear plant, during his visit to China. Similarly, yesterday, as David Cameron arrived in the country, Standard Chartered and the Agricultural Bank of China signed an agreement to start renminbi clearing services in the UK for the first time.
Yet both deals had been in gestation for a long time. Wouldn't they have happened anyway, without the arrival of a senior minister? Lord Sassoon, chairman of the China-Britain Business Council, says it's an impossible question to answer: "I think these missions often bring to a head or accelerate things that might have happened... But it's difficult to say. I'm quite sure these high level events do act as a focus to get deals done."
Sonny Leong, a publisher who has been on official trade delegations to China in the past, is sceptical of their value to large firms. "If you are a multinational blue chip, frankly how much it helps is questionable because you would have local representative offices," he said. "Maybe it's matter of the chief executives shaking a few hands and drinking a few maotais [an expensive Chinese liquor]."
There may be some value for large firms in subtly demonstrating their political connections too. Sir Andrew Witty of GlaxoSmithKline, which has been accused of corruption in China, is on the current trip. It can't hurt the drugs company to be witnessed by the Chinese as being firmly in the protective prime ministerial fold.
What about the larger economic picture? Mr Cameron said the UK is "uniquely placed" to make the case for an EU-China trade deal. But arguably Germany, the top European exporter to China, should be taking the lead.
One of the firms on the jaunt is the tiny Westaway Sausages of Devon. Another is the small online commerce site, Nuji. Their presence seems incongruous alongside the leviathans of the FTSE 100. But some say small firms derive the greatest benefit. Paul Maher, founder of Positive Marketing which creates infographics and web copy, was on the earlier delegation to China with the Chancellor in October. Mr Maher said a small firm like his would never, otherwise, have been able to tap such opportunities: "I'm [benefiting from] very well organised logistics that sort out hotels, arrange translators, an auditorium full of businessmen that we can address and one-on-one meetings with entrepreneurs."
The Chinese preference for serious "face time" before doing deals also makes the trips valuable. Mr Maher points out that a business deal in America can involve just a few meetings on social media and then a coffee. "That is alien to Chinese business," he said. And this is where being in an official delegation can really make the difference. The fact that firms can associate themselves with the Prime Minister also helps. "It gives the company a little bit of credibility and cachet," Mr Leong said. "The Chinese love such things. It means you're OK, you're not some fly-by-night organisation."
What is the aggregate economic benefit? "In China business is done on a long-term basis. You don't go there, see somebody, sign an order and bring it back. It does not work that way. It takes someone to build a relationship," Mr Leong said.
"Too soon to tell": everyone thinks that's what Zhou Enlai said when asked by Richard Nixon what he thought the significance was of the French Revolution. Actually, that's a myth. Nevertheless perhaps that phrase best describes the economic value of these diplomatic trade expeditions: too soon to tell.
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