Hamish McRae: How foreign buyers can prove a boon for British businesses

Economic View

So the Chinese are to buy Sunseeker, the yacht-builders of Poole. If you do not follow this sort of stuff, all you need to know is that you can see their product line in four Bond movies including Quantum of Solace, which actually features three of them. For those of us who potter about in a Mirror dingy, this is top-end indeed.

It is a fascinating story at several levels. It shows how you can build a real business in Britain by making things.

Back in the 1970s Sunseeker was making rather sweet, little 17-footer launches, and was persuaded to start building rather larger and sleeker ones. Gradually, as most of the British shipbuilding industry was disappearing, it grew into what is now one of the top luxury yacht-builders in the world, along in Britain with Fairline, Princess and a few others.

It shows that top-end craft manufacturing is not just alive and well; it is one of the areas of economic competition where the UK has a clear advantage.

Another aspect of the story, noted in these columns before, is that luxury is a big business, particularly for Europe.

We don't know what the next generation of rich people – most of whom are living in the emerging markets – will ultimately want to do with their wealth. But for the time being at least they seem to want to do much the same as the previous generation, and yachts, racehorses and private jets come pretty high up the scale.

Even so, from a UK perspective, the boom in foreign investment in British companies raises a huge question. Basically, are we wise to be selling so many of our companies to foreigners? It is a deceptively simple query.

For a start it presumes that we could stop it, which would be difficult. We should remember, too, that we earn much more from our foreign investments than we pay out to foreign investors in the UK, earnings which go a long way towards covering our deficit in manufactured goods.

But it also goes to the heart of the debate about our attitudes to globalisation. The UK is about the most open market in the world to foreign investment. To what extent are we really benefiting from that and to what extent are we being taken for a ride?

There used to be a rather crude rule of thumb that inward direct investment was generally to be welcomed but other forms of investment were to be regarded more cautiously. So if a company wanted to build a factory here, we not only rolled out the red carpet and got the local MP to open the plant; we also gave it large grants to set up here rather than somewhere else.

By contrast, foreign takeovers of existing companies, which in the first instance at least did not result in any new factories, were more suspect.

I think that has changed somewhat. We learnt the hard way that foreign factories built with taxpayers' money often were the first to be shut when times grew hard and in some cases the project barely got off the ground. Think of DeLorean. On the other hand, some foreign purchases of existing British companies have proved very successful, of which the most recent example in that same field is Tata's purchase of Jaguar Land Rover.

So I think the argument now is more nuanced. Where an investment, whatever its form, brings in good management, it brings big benefits to both sides.

But where the investment is in some way artificial – for example it only happens because of a taxpayer subsidy – then it should be regarded with more suspicion. I am afraid we need to see taxpayer-supported foreign investment in nuclear power plants in that light. Besides, it is hard to know in advance whether any particular investment is going to be successful. Again go back to Jaguar Land Rover.

Rationally, ownership by a great US car firm, Ford, and a great German one, BMW, would bring certain success. Rationally, ownership by an Indian manufacturer with no experience of luxury-car production was likely to fail.

But quite the reverse happened and now it is China's turn. We are in the second stage of China establishing an overseas commercial empire. The first stage was ensuring access to raw materials, notably in Africa and other parts of the emerging world. That will continue and develop, taking on new directions. Access to food supplies will become more important.

The next stage, still just beginning, will be acquiring assets in the developed world, and that brings up the great question of what do you do? How do you avoid being ripped off? Can you really add value? Will you be blocked?

Here China is on a learning curve. The Sunseeker bid is actually quite an easy one for both sides. From a Chinese perspective the company produces the iconic products to which the Chinese rich aspire.

Even if this turns out to be a vanity purchase, and I don't think it will be, it will bring improved access to Asian markets and that alone would be enough to justify the deal.

From a UK perspective, there is unlikely to be much push-back, as there was for example in the case of Kraft buying Cadbury.

Most of Sunseeker's yachts were exported and our experience of foreign ownership of UK luxury brands has been pretty positive.

There will, however, be more difficult ones ahead. The great wall of Chinese money is about to hit us. Why keep your money in depreciating US dollar bonds, which give you a minimal return, when you can buy real assets out of which, managed wisely, you can make a lot of money – and in this particular instance also have a lot of fun?

News
The Banksy image in Folkestone before it was vandalised
people
Life and Style
tech

Sales of the tablet are set to fall again, say analysts

Sport
football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
PROMOTED VIDEO
News
i100
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
News
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
News
Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister
news

Met Police confirm there was a 'minor disturbance' and that no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010
films

George Lucas criticises the major Hollywood film studios

Voices
Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'
voices

Does Chris Grayling realise what a vague concept he is dealing with?

News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
News
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)
news

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style
gaming

I Am Bread could actually be a challenging and nuanced title

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album