Chinese Community and Business
On 10 May Gerry Yeung addressed a Corporate Members’ Luncheon at his own restaurant, the Yang Sing. About 50 people representing 16 of our Corporate Member companies enjoyed a, not surprisingly, fine Chinese banquet of seven dim sum and three main courses.
They were then enlightened by Gerry’s fascinating address on ‘Chinese community and business’ yet were still able to get off back to work by 2.30 pm.
Good afternoon Ladies & Gentlemen and welcome to the Manchester Civic Society Corporate Luncheon at the Yang Sing.
I would like to speak to you for a little while on the subject of the Chinese community and business.
According to the 2000 Census, there are approximately 280,000 – 300,000 UK citizens who are of Chinese origin.
It all started with humble beginnings in 1685, when the first Chinese person, Mr Shen, was brought over to Oxford by missionaries. His job was to catalogue a Chinese collection there. I don’t know whether he ever returned to China, but life must have been very difficult for him without any decent Chinese restaurants!
Today we can be very proud of the fact that Britain has matured into one of the most tolerant and open societies in world history. But it hasn’t always been like that!
Early Chinese migrants were merchant seamen and they congregated in the dock areas of London, Cardiff and Liverpool. These small Chinese dockland enclaves continued to be the pattern of settlement until the late 1940’s and early 50s. The official census showed an increase in the Chinese population from 78 in 1851 to approximately 2,000 in 1931. How accurate these figures are is difficult to say, because merchant seamen as you know are always on the move.
The establishment, as well as the popular press was hugely politically incorrect, I quote a few lines from The Times of 22 November 1878.
‘We shall see a rise, in the cities of Europe, Chinese quarters which will cause discontent among the working classes, with whom they will have to seriously reckon and the Chinese will end by fixing themselves amongst us like the Jews.’
In 1920, after a young woman appeared in court in East London, the magistrate remarked on the ‘Moral suicide of the English women lured into Chinatown, by a mixture of drugs and pretty clothes’ followed by headlines in the Daily Express ‘The yellow peril in London. Vast syndicates of vice with a criminal master.’
The creation in the 30s of the oriental villain, Dr Fu Man Chu, added to the promotion of the evil Chinaman image, but such stereotyping already existed. In 1911 a journalist wrote in a London magazine ‘A slow silent but steady infiltration of Chinese has taken place and a certain evil arising out of the situation has begun to penetrate the calm front presented by this ancient and inscrutable people.’ He also said that the young white woman ‘appears to find in the Chinese an exotic charm, a romance of the unusual.’ I can only surmise that the Chinese men at the turn of the last century must have been immensely more charming than Chinese men today, because I have never had such luck!!
Despite the fact that I still continue to have no luck – I am pleased to report that Britain’s opinion of the Chinese has changed for the better!
After WWII, Britain was short of labour and no restrictions were placed on Commonwealth citizens coming to UK.
From Hong Kong, the Hakar people arrived. The Hakar are the indigenous Hong Kong people. They were migrants from Northern China to Southern China during the Mongolian invasion in the 13th Century. They survived by farming – subsistence farming, growing rice etc. When the People’s Republic of China was formed in 1949, many Chinese saw Hong Kong as a refuge an moved there, bringing with them skills and investment. Hong Kong was transformed from a mere port to an industrial centre. This, together with the importation of cheap rice from Thailand, contributed to the collapse of the agricultural economy in Hong Kong. The males in the villages began to look for jobs in UK, seeing its post war economic boom as an attractive and viable alternative. They arrived in Britain and farmers turned cooks – creating the post war chop suey eating houses. The number of Chinese restaurants pre 1940 was estimated to be 30 - 40, this increased to 800 - 1,000 by the mid 1960s. Restaurants - things are really starting to improve now! Nothing of any quality yet – but it is not too long until 1977!
Once they were economically stable, they brought their families over to join them.
By mid 1960s the immigration laws had tightened. People born in British dependent territories no longer had automatic rights of abode in UK. Chinese migration remained at a slow but steady pace. It wasn’t until the late 1970s that the next wave of mass immigration took place. Those were the Vietnamese Boat People. Now you may or may not know that in fact many of the Vietnamese refugees were actually ethnic Chinese who had been turfed out or trying to get out of Vietnam after the military conflict between Vietnam and China – an ethnic cleansing process before the term was even invented. In the 80’s, the Chinese population also expanded by a significant number of Chinese students from mainland China, a number of whom sought to stay in UK after the Tiananmen Square incident of 1989.
During the last decade (due to the open-door policy and economic growth in China and the relaxation of work permit schemes by the Labour government in UK), a large number of people from mainland China settled in this country.
Another interesting phenomenon is that since 9/11, when America basically closed the door on visa applications by Chinese students, the country which benefited the most was UK. Since then, UK has become the most popular destination for Chinese students. It is estimated that there are 60 - 70,000 Chinese students here, studying anything from a short course in English to a PHD in engineering!
It is against this background that the Chinese community in Manchester began to grow in late 60s early 70s. When our family arrived in Manchester in the early 70s, the old Chinatown in Liverpool was still the attraction for the Chinese in the NW. In fact I remember that we had to go to Liverpool to buy our Chinese provisions. However, the economy of Liverpool was in decline. Manchester, having survived the demise of the cotton industry, was emerging as the commercial centre of the NW. Many Chinese families are now re-united here and are setting up their own catering businesses. The success of such businesses obviously depends upon the strength of the local economy. The demands from Chinese businesses around Manchester, together with a sizeable Chinese student population in the universities and colleges, meant that Chinatown was gradually developing into a geographically definable area. A few restaurants were joined by a couple of Chinese supermarkets and other businesses soon followed.
For many years, the Bank of China (based in London) provided a mobile service as a deposit taker and remitter of money back home. In the NW it probably had more customers in Liverpool than in Manchester. However, in the late 70s, Manchester was chosen as the site to set up a new branch, because it was felt that Manchester was more central to the dispersed Chinese population.
The presence of the Bank of China probably tipped the balance when the Chinese Ministry of Foreign affairs was choosing a site for the Chinese Consulate in the early 80s, thus consolidating Manchester’s position as the largest Chinatown outside London.
In the mid 80s, the building of the Chinese Arch clearly identified the area that we now call Chinatown.
Economically, the Chinese community can be divided into three groups:
Older migrants who are Cantonese speaking and most of whom are still in the catering business.
New migrants who are Mandarin speakers and whose businesses are more diverse – academics, import and export, consultants for companies trading with China, acupuncturists, herbalists etc. Even one or two Chinese premiership footballers and an up and coming snooker player!
The BBC – British Born Chinese – the Chinese second generation are the most well integrated group amongst ethnic minorities. A large proportion of the BBC are high educational achievers and literally ‘disappear’ into the mainstream host community. They are found in all walks of life - legal, medical, financial, media, PR, advertising, IT, retail and many other professions, but surprisingly there are relatively few second generation Chinese entrepreneurs.
But by and large the Chinese businesses remain as SMEs. We did not find one single Chinese name in the Sunday Times Rich List for this year! There is certainly no Chinese Mittal, who can splash out £30m on his daughter’s wedding! However, I think that the Sunday Times did miss out the richest Chinese family in the land – the Wing Yip family. The community reckons that his property and Chinese supermarket empire is worth somewhere between £60-£80m, but they wish to remain relatively low profile.
But perhaps what we should be looking for is not necessarily home grown Chinese multi-millionaires! We should look into things a little deeper.
As China is going global, it has been predicted that China’s outflow investment (FDI – Foreign Direct Investment) will be the second largest in the world. Even now there is already small scale Chinese investment coming into the UK. I have often been asked what sort of businesses would Chinese companies be looking to invest:
Logistics
Branding
Technological partnership
Processing & packing industries
Niche manufacturing
Let me give you a few examples:
The Trafford Park Development Corporation attracted a Taiwanese company to invest in Manchester some 12 years ago. The company is called Teco. It distributes industrial motors to Europe. Its mother company is a huge conglomerate in Taiwan. Its success lead to a number of other Taiwanese companies investing in the Manchester area, as well as leading the CEO of Teco, David Yen, to stage a management buy-out. One of them has a factory in Worsley, employing some 100 people assembling electronic products. His company distributes electronic products to Europe; turning over £60m per year. He tells me that it is a very tough industry because the margin is very tight. He is now trying to build a brand name called Relisys.
In terms of technological partnership, I have come across a number of parties in the restaurant where visiting Chinese are taking part in JVs with local firms who have a certain technological process that can be applied. Usually it means that the manufacturing takes place in China and the research and development is done here.
However, that cannot be helped, it will be a long time before all the surplus labour in China is used up! Out of 1.3billion people in China, 700 million in employment. From that 700 million, 490 are rural workers, with 320 million out of the 490 directly employed in agriculture. If you accept that China is doing what all major economic powers are trying to do and transfer from an agricultural to an urban industrial economy, you can see that it really will be an awful long time before China uses up its surplus rural labour force.
An example of niche manufacturing will definitely be seen if Nanjing Motors does restart the production of MGs in Longbridge.
The Chinese government has a ‘going out’ policy. They are trying to encourage businesses to get closer to the market. A government sponsored company called Chinamex, whose registered office is the Ministry of Commerce, set up a trading centre in Dubai, housing 3,000 Chinese traders serving the market in the Middle East and East Africa.
Chinamex is looking to set up similar operations in America and Europe. I know that a group of Chinese businessmen are trying to entice Chinamex to set up an exhibition, wholesale and logistics centre for 1,000 Chinese traders and manufacturers selling higher quality electrical, electronic and engineering products to UK and Europe. We might just see a very large Chinese trading centre in Manchester in the next 18 months.
As much as English businessmen need to learn the etiquette of doing business in China, equally the large Chinese conglomerates who are investing globally also need to learn the business cultures of other countries.
The Rover deal didn’t come off and Shanghai Motors didn’t exactly get a good press. You may say that it is just business and the reason is probably because the Phoenix 4 were better at negotiating for their own deals rather than Rover! However, you may or may not be aware that the attempted take over of an oil company (Unocal) in US by China National Offshore Oil Corporation in the summer of 2005 failed because it was blocked by the US Congress. China also needs to understand the sensitivity of ‘local’ political issues and the mechanism of doing business. They have got to get used to the fact that, for example, one has to pay out enormous sums to lobbyists, be they on Capitol Hill or in Brussels!
I mentioned earlier that we have attracted some 60,000 - 70,000 Chinese students to study in UK. If we consider education in business terms and consider that each student spends some £12 - £15,000 per year on fees, living expenses and accommodation, then this generates an income of something close to a billion pounds for our educational sector. Indeed many educational institutions are very proactive in recruiting students from China!! This however is a very narrow, short-term view.
Arup, who have successfully completed a number of airport projects in China, are now building the world’s first sustainable city at Dongtan in Shanghai, an extremely high profile project. Arup’s relationship with China was initiated by a Chinese student they employed some years ago.
The Scottish government is now granting visas to foreign students so that they can remain there to work for two years after their graduation. I have long advocated that this practice should be extended to the whole of the UK. If, as we all recognise, business is about connections and relationships; think of the potential for UK businesses when all those Chinese students start their working life in the UK and create a natural link which will continue to develop as they return to China.