The world's emerging economies offer huge opportunities. In the first of a three-part series, John Dean looks at China.
THEY are the emerging economies, the rapidly growing nations that offer massive opportunities for businesses in the North-East. Exports alone are worth £8bn to North-East businesses every year, with countries such as Germany and the US among the most popular markets.
But the rapid development of China, India and Eastern Europe is changing the global market, presenting increasing opportunities in export trade and alliances bringing inward investment to the region.
In recent times, the region's main export and foreign inward investment activities have been concentrated on automotives, chemicals and pharmaceuticals, usually involving multi-national companies with bases in the North-East.
But according to Ross Cordiner, deputy international trade director for UK Trade and Investment (UKTI) in the North-East, smaller companies should be taking advantage of the opportunities, and not just in the big three sectors.
UKTI helps companies foster links with foreign counterparts and Newcastle-based Mr Cordiner said: "The North-East has a lot of world-class companies that are small to medium-sized enterprises (SMEs)and they should not divorce what is happening in the North-East and the UK from what is happening in the world. The question they should be asking is not 'why should we export?' but 'why should we not export?'"
China, as the world's fastest growing economy, presents some of the biggest opportunities, and according to Mr Cordiner, they exist in every business sector imaginable, from computer software and medical supplies to bridge-building.
He said the key to dealing with companies in China was being prepared to collaborate.
Mr Cordiner said there were now more than 40 Chinese companies with North-East bases, adding: "There are a lot of North-East companies involved in joint ventures.
"What attracts foreign investors such as Chinese companies to the North-East are our five universities, the skilled workforce, the work ethic, the pleasant environment and the support from agencies in the North-East.
"That support has seen organisations such as UKTI and One NorthEast working increasingly closely together to provide a united front to foreign investors."
Indeed, One NorthEast recently signed a memorandum of agreement with representatives of Shanghai in an attempt to attract investment and encourage exports.
The strategy concentrates on the five 'pillars,' the centres of excellence created in the region, including digital technology and innovation in the chemical industry, although there are opportunities available outside them as well.
Kevin Aisbitt, One NorthEast's investment and product development manager, whose remit includes China and the Far East, said: "We have taken a strategic overview in what is a long-term process.
"The successful way to work with China is to form alliances with local Chinese companies. North-East companies dealing with Chinese companies should be prepared to give as well as take."
Dorman Long shows how to bridge the skills gap
ONE company that has taken significant advantage of Chinese opportunities is Dorman Long Technology (DLT), part of the Cleveland Bridge group.
Recently, Darlington-based DLT announced that it had won three major bridge sub-contracts in China, totalling more than US$4.3m.
DLT is a specialist contractor, consultant and equipment supplier for the engineering and construction industries and the awards were seen as important as it develops a share of the Chinese market.
In Chongqing, in south-west China, DLT has been awarded the sub-contract to carry out engineering for the Chao Tian Men bridge, for main contractor 2nd Navigation Engineering Bureau, and the sub-contract to erect the 1,325 tonne steel Shibanpo bridge, for the Chongqing Bridge and Engineering Company.
In Nantong, near Shanghai, DLT has been awarded the sub-contract to design and supply deck erection gantries for the Sutong bridge, for main contractor 2nd Navigation Engineering Bureau.
Sutong has a main span of 1,088m and crosses the Yangtze River about 100km inland from Shanghai. It is due for completion in June next year.
The Chao Tian Men bridge crosses the Yangtze River in the city of Chongqin in south-west China. It has a main span of 552m, and has been designed to resemble the Sydney Harbour Bridge, completed by famous North-East construction company Dorman Long & Co. in 1932.
For DLT, forging alliances has been crucial to its success in China.
David Dyer, managing director of the company, said: "China really does have an aggressive and exciting plan for the development of its infrastructure, and these three bridges amply illustrate the government's ambitions.
"We have very good working relationships with a number of design and contracting organisations in China and are pleased to be able to share DLT's expertise in major bridge construction with them on these significant engineering projects.
"We hope to be contributing to China's economic development for many years to come."
Case study: 'I regard my associates as friends'
For Newcastle company Griersons Limited, the key to success in China is developing a strong personal relationship.
In January, the software house signed a partnership agreement with a Shanghai company that will market and sell Griersons' software package, initially in Shanghai then across the rest of China. Translated into Chinese, the package is written for the legal profession and helps companies control aspects of their business such as financial management and work flow.
John Dobie, company director, said: "Friendship is the key to success in doing business in China. I regard my associates in China as friends rather than business acquaintances. I think that is the same in all business.
"We also deal with companies in Nigeria and Korea and once you get talking to them, it is the same as dealing with SMEs in the UK. We all have the same problems and the same aspirations."
* UK Trade and Investment has arranged a week of events from March 13 to 17 to help North-East companies take advantage of opportunities abroad. Contact Ross Cordiner on 0845 0505054 for more information.
From Communism to competition at 'astonishing rate'
NO economy in the world has developed as rapidly as China's in recent years.
From a Communist country locked into antiquated ways and riven by internal political strife, it has modernised at an astonishing rate.
The reason has been the willingness of its political leaders to embrace Western business and draw up alliances with foreign investors.
Those alliances spell the way forward, because when it comes to direct competition, China has distinct advantages, not least its vast workforce and the lower level of wages.
Over recent months, a number of North-East companies have cited cheap competition from countries such as China as reasons for shedding jobs, closing plants or reporting reduced turnover. Companies involved in everything from the construction business to making equipment for vending machines or making flags have suffered.
Their problems confirm that China cannot be ignored as it moves into every business sector, from automotive parts and pharmaceuticals to electronics and medical supplies.
With cities such as Beijing and Shanghai taking the lead, it is estimated that China's exports have grown at about 30 per cent annually over the past few years.
However, it is not all good news for China and the speed with which its economy has grown has also presented problems.
The main one is concerns that the economy has become unbalanced, partly because of the country's widespread poverty, particularly in rural areas away from the big cities.
With exports dramatically outstripping the relatively weak domestic market, it means that, should the foreign markets collapse, or move elsewhere to other emerging economies, such as Brazil, India, South America and Eastern Europe, then China has a problem. And if China has a problem, so does the rest of the world
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