International Business - UK and China

Pages 7 (1757 words)
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UK has been the fourth largest economy in the world. It has been because Chinese economy is leaping ahead as it has done for several years, has pushed the UK into fifth position. The economy of the world's most populous nation has been growing vastly in recent years with an annual growth rate regularly nudging - even exceeding - 10%.


China has a growth rate three times higher than that of Europe, but wage levels there are typically close to a tenth of the UK's. The mere fact that China is such a successful player in the global economy means that small businesses in the UK are affected by the growth of the Chinese market. There are mutual benefits for both UK and Chinese businesses. China has a strong manufacturing base but is in need of technical expertise and innovative technologies that can be provided by Welsh companies. Moreover, there is a strong incentive for Chinese companies to co-operate with Britain as it can be used as a gateway to Europe, and in turn the biggest consumer market in world.
Chinese labor costs are very low. There is a fear from some small firms that British manufacturing base could be undermined. Indeed if a large manufacturer relocates to China this has implications for small manufacturers who are first or second-tier suppliers. In terms of labor costs a UK small manufacturer cannot compete and many are suffering as a result. Others indicate, however, that labor is not their highest overhead and when transport costs are included, they believe that they can compete favourably with Chinese products. ...
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