2023 Report on the Development of Chinese Enterprises in the UK [Photo provided to chinadaily.com.cn]

Despite the COVID-19 pandemic, geopolitical challenges, and short-term economic pressures, Chinese companies have not only survived but thrived in the United Kingdom, where they continue to make a contribution to a prosperous local economy and support the common goals of both countries, a new report shows.

The 2023 Report on the Development of Chinese Enterprises in the UK, which was compiled by the China Chamber of Commerce in the UK for the fourth consecutive year, is based on an extensive survey of 87 Chinese companies and detailed interviews with 13 representative companies. Some 28 percent of the companies involved were from the financial sector, while 25 percent were from the industrial sector, and 20 percent from the consumer goods sector.

With detailed sentiments included of Chinese enterprises in the UK about the current business environment and their operational and development opportunities and challenges, the report offers valuable recommendations for governments and other key stakeholders.

Chinese companies view the UK as their gateway to the European market, with 59 percent of respondents saying they see the UK as one of the top three most important markets, while more than 17 percent of Chinese companies recognize the UK as their top destination for investment.

[Chen Tianshu / China Daily]

As the world emerged from the COVID-19 pandemic, companies appeared to rebound from the challenges. Of those surveyed, 83 percent reported stable-to-growing revenue, and 48 percent described themselves as profitable, with their highest level of revenue growth reported in the past four years.

However, like many companies operating in the UK, Chinese companies are currently facing a labor shortage, with roughly two-thirds pointing to an anticipated "slight" or "severe" labor shortage during the next two years.

Chinese companies hope to hire more employees, the annual report found, with them recording a steady increase during the past four years of their workforce expansion.

The year 2023 saw more than half of the surveyed companies planning to increase their employee numbers for the first time, a record 7 percent rise from 2020.

[Chen Tianshu / China Daily]

Chinese companies are also seeking to branch out. Although London remains the top choice for most Chinese financial companies to establish their headquarters in the UK, regions outside London are also gaining investment.

The survey found that 23 percent of the surveyed Chinese enterprises have headquarters outside London, and more than 11 percent and 14 percent of Chinese companies plan to increase their investment in the East and West Midlands, respectively, echoing the UK's government's Levelling Up plan.

Chinese companies reinvest. Almost 67 percent of Chinese companies in the UK have reinvested more than 50 percent of their profits back into the UK market, with some reinvesting 100 percent of their profits.

In the 2022-2023 financial year, the proportion of companies reporting a significant or marginal increase in capital expenditure or investment has risen from 20 percent to 30 percent.

This trend is supported by the UK's overall business environment advantages. According to this year's survey, more than 40 percent of Chinese companies chose to invest in the UK because of its access to potential customers and the market in Europe. Additionally, more than 56 percent of Chinese companies are attracted by the UK's stability and transparency in the political, legal, and regulatory environment.