British companies' exposure to the Chinese Market

Start date: 1 January 2022
End date: 31 March 2022
Principal investigator: Professor Yingqi (Annie) Wei (Leeds University Business School) and Dr Palitha Konara (University of Sussex)
Co-investigators: Dr Giles Blackburne (Leeds University Business School), Dr Yohannes Ayele (University of Sussex) and Mr Guillermo Larbalestier (University of Sussex),

Description

Through the analysis of primary and secondary data, the project team will evaluate British companies’ investment, supply chain and customer portfolio exposure to China.

Background

During these current times of change and uncertainty, British companies are being exposed to new corporate risks arising from the Covid-19 pandemic, policy shifts and a deteriorating business climate.

China presents British companies with both opportunities and challenges for their business development and growth. According to the DIT, China was the UK’s 3rd largest trading partner in the four quarters to the end of 2021Q2, amounting to £93 billion (7.6% of UK’s total trade) and the stock of foreign direct investment (FDI) from the UK in China was £11 billion in 2019 (0.7% of UK’s total).

However, understanding British companies’ exposure to China is paramount to their risk management and business planning.

This project, commissioned by FCDO, will take an integrative approach to assess risk exposure along the dimensions of supply risks, demand risks and operational risks. We will be examining the investments, supply base and customer portfolio of British companies with investments in China, based on both primary and secondary data.

Our findings will offer extensive insights on how companies can mitigate risks and improve their performance in China during an era of global uncertainty, especially in view of post-Brexit challenges and the Covid-19 pandemic.

Data collection

From a quantitative perspective, this project will utilise and synthesise data from a number of resources, such as Bureau van Dijk (BvD)’s Fame, Zephy and Orbis Crossborder Investment databases, along with the Financial Times’ fDi Markets database and Bloomberg’s supply chain database.

In order to gain a vital UK company perspective, we also plan to interview key informants from British multinationals to understand their future expectations and intentions relating to China exposure. All views and comments from interviewees will be kept strictly confidential.

Evaluation of British companies’ exposure to China will take into account recent global, regional and national policy/economic developments. Gaining an understanding of such political and economic contingency factors will help companies understand the risk planning and management necessary for building organisational resilience.

This project is funded by the Foreign, Commonwealth & Development Office (FCDO).