UK drawcards are the envy of Europeans

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The Independent Online

Business Editor

Britain's record in attracting overseas investment has been one of the government's success stories - so much so that it has aroused concern and even anger on the continent.

The UK has been attracting a third of all inward investment to the European union, and is the favourite location for Japanese, US and Korean companies.

The Department of Trade and Industry says that in the last two years, there have been 865 inward investment projects linked to the creation of 188,000 new jobs. More than half of the investments are expansions of existing plants.

The UK received more than 40 per cent of Japanese and US investment in the EU. With the new Samsung plant in Wynyard, near Stockton-on-Tees, it will have attracted more than half of Korean investment.

Siemens was won over to a UK site after a substantial effort co-ordinated by DTI officials specialising in winning international investment projects for the UK.

The project team was led by the DTI's Invest in Britain Bureau (IBB) and the Industrial Development Unit, which handles all the department's large regional aid cases.

The IBB and English Partnerships - a body set up to boost regeneration and inward investment - assisted Siemens in its final studies of site locations, local services and facilities.

Foreign companies come to the UK for a variety of reasons, including relatively low labour costs, availability of skilled workers, government aid packages, freedom from government red tape - compared with some European competitors - and a preference in the case of the Japanese and the Americans for English as a working language.

The Siemens plant is the biggest and certainly one of the most technically advanced of recent investment projects. Sectors favoured by foreign investors include vehicles, chemicals, engineering, electronics, pharmaceuticals and cosmetics.

Studies have shown that in some industries, such as cars, the arrival of better management practices is an important benefit to the UK, because it provides a benchmark for domestic companies to improve their own methods.

Japanese companies' high standards help to raise the efficiency of UK component suppliers. The Japanese car plants have a high British component content.

Car investments also includes expansion by overseas-owned companies already here, such as Ford's decision to concentrate new investment in Jaguar in Britain rather than the alternative of the US.

The DTI said the inflow had helped to modernise the industrial base, provide more jobs and output as well as new products and processes, fill gaps in local production and bring in technology and management expertise.

The DTI said one in 100 UK firms were overseas-owned and were larger than average.