Brexit, Britain, and Beijing

Article By : Alix Paultre, EE Times

What will Brexit mean for U.K.-China trade? Syrus Lohrasb of the China-Britain Business Fusion Group sees a balancing act between protecting "prime assets" and courting investment in AI, robotics, and hardware-software integration.

International business is never an easy place to predict change, and with Brexit looming, uncertainty is running high. One question is what Britain’s withdrawal from the European Union will mean for U.K.-China trade. To get a better handle on this important trade relationship, both as it stands now and how it may evolve, EE Times met with Syrus Lohrasb, CEO of the China-Britain Business Fusion Group. The consultancy assists both U.K.- and Chinese-based companies with their respective market-entry plans, helping build relationships with decision makers within the respective target countries. The company provides assistance with everything from real estate to equity investment and even the educational needs of employees’ children. It is thus well positioned to provide a comprehensive perspective on Brexit’s implications.

The Chinese government regards developing market sectors more favorably than legacy technologies and businesses. Areas of focus include artificial intelligence, robotics, alternative energy, and electric vehicles. For example, Lohrasb said, Beijing’s approval of a plan to make China the global leader in AI by 2030 has created additional opportunities in that sector.

EE Times: One issue in China is uneven development. Money is being applied in irregular places, so you’ve got infrastructure in some places that is very advanced, while in nearby places the infrastructure is a legacy from the ‘60s. How does that affect doing business with China?

Syrus Lohrasb

Syrus Lohrasb: I think that when you do business with China, you need to travel extensively throughout the country and find out what that beautiful country is all about. You will come across a very ancient culture, and you’ll understand that this culture is deep-rooted. You will begin to understand that some of that culture needs to be preserved. It may be outdated … but there is a reason behind it. There is balance.

When the Chinese government talks about a harmonious society, they truly mean it. You cannot have [just] an advanced society in terms of electronics and machinery and the future when you’ve still got a very strong past. You need to create a balance between the two within the society.

EET: In light of that, do you see Brexit through the eyes of the Chinese as a risk or an opportunity?

Lohrasb: It’s a great opportunity for the Chinese, and we can see that already in a number of sectors. It’s no longer about buying football clubs; it’s more about innovation, it’s more about technology. It’s more about things like the purchase of U.K. chip designer Imagination [in September] for £550 million [$726 million] by a Chinese private-equity firm. [Imagination was valued at] £600 million back on June 23 of last year. So, you can see where Brexit has had an impact with respect to M&A deals. A cool savings of £50 million is big attraction for the Chinese.

On challenges
EET: Having said that, what are some of the challenges you see?

Lohrasb: I think there are concerns that the U.K. is losing some of its prime assets, not just to the Chinese but also to other countries. The challenge is to make sure that although there is what is perceived to be a loss of assets, a company’s operation continues to create jobs and prosperity for United Kingdom.

This is a challenge, if you’re not looking at a company that comes in, strips assets, and takes them back to their home country. Development of operations in the U.K. is a challenge. Obviously, Brexit has caused a lot of uncertainty, especially in the financial services [sector], which is the jewel in the crown, so to speak, in the U.K. And financial services have a tech dimension.

It’s important to preserve these prime assets — or the Square Mile, as they say, in the City — and make sure that they’re not impacted very badly. … I think the challenge is how to do that, and I think there are solutions that Prime Minister [Theresa May] is looking at in terms of passporting, in terms of staying in single markets, in terms of meeting a transitional period where Britain will have a respite in organizing itself.

It’s a question of money. It’s coming down to money now, and how much the U.K. has to pay to get out of the European Union. But I always say the United Kingdom needs to be part of a continent. We are not part of Africa; we’re not part of Asia; we’re not part of America. We have to be part of Europe. And we continue to do this [despite Brexit]. We continue to build friendship with the Europeans.