Scotland: a trading nation

Economic indicators
GDP 2017*	£9,322bn
GDP per capita 2017*	£6,724
GDP annual growth rate 2013-2017	8.6%
GDP annual growth forecast 2018-2023	8.9%
Population	1,386m
Projected population growth 2017-2050 (% change)	-3%
Average tariff 2016	7.9%

Scotland’s exports to China
Scotland’s exports to China 2017	£625m
Average annual growth in Scotland’s exports to China 2013-2017	1.6%
Country rank in Scotland’s exports 2017	16

Scotland's Top Exports to China

China imports from the world
China goods and services imports 2017*	£1,716bn
China average annual Import growth 2013-2017*	6.1%

China Top 15 Import Sectors

Sources: Economic indicators (World Bank, IMF World Economic Outlook), Scotland’s Exports (Export Statistics Scotland 2017), Country Imports (World Bank, UN Comtrade).

* denotes an indicator which has been converted into GB£ from US$ using the Bank of England’s average annual spot rate data. Note growth rates may vary depending on unit of currency used.

The Chinese Economy

China is a huge and expanding market for Scottish businesses.

The economy is predicted to grow at about 6.3% in 2019 and 6.0% in 2020.

You can read about what China imports at World’s Top Exports

Key Economic indicators include:

• The Chinese economy has seen consistently strong growth over time. GDP increased by 6.6% in 2018. (OECD)
• Exports as a % of GDP (Gross Domestic Product) were just 20% in 2017. (The World Bank)
• Unemployment is low at 3.9% in 2017. (The World Bank)

Export Challenges

There are some unique challenges when you are doing business in or with China. These include:

• large parts of the economy are still closed to full foreign participation
• strong competition from well-resourced and positioned state-owned enterprises
• finding and retaining the right skills in the local workforce
• complex business culture
• language barriers
• need for patience to build up trust and networks
• significant time difference
• weather extremes across the country and high levels of pollution in certain urban centres
• anti-monopoly legislation in relation to foreign firms

China is not one single market. There are different regional economies and economic hubs. You will need to understand the regional economic and cultural differences that could impact the success of your product and develop the right strategy.

Read about the different economic regions in the China-Britain Business Council guide to choosing the right location

You should do as much market research and planning as possible before starting to sell your products and services in China, using both desk research and visits to the market. As the market is so complex you should also consider getting specialist market research help.

You can contact the China-Britain Business Council’s business support service to help you research the Chinese market.

The Department for International Trade’s guide to doing business in China can be found here

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act

Read the Foreign and Commonwealth Office’s (FCO) Overseas Business Risk report for China.

Strengths of the Chinese Market

China is ranked 46 out of 190 countries in the World Bank ranking for ease of doing business in 2018. The ranking has jumped from 78 in 2017.

• A huge, growing market
• A stable economy
• Many opportunities in a maturing market

Benefits for Scottish businesses exporting to China

China’s ambitious economic growth and infrastructure programmes, such as the Belt and Road Initiative, offer opportunities for Scotland’s businesses and institutions.

• Scottish and UK brands have a very positive reputation
• Will become the world’s biggest market for luxury goods in 2020
• Largest population in the world
• Fast growing market

What Scotland exports to China

China is Scotland’s 16th largest export market. Exports to China were worth £625 m in 2017. 

This represents 1.9% of Scotland’s total International exports.

Top 5 Scottish export sectors to China:

• Education
• Life and Chemical Sciences
• Food and Drink
• Engineering and Advanced Manufacturing
• Technology, digital and media

China’s priority sectors for economic development include:

• Biotechnology and Pharmaceuticals
• Technology, digital and media
• Manufacturing
• Renewable Energy
• Infrastructure
• Financial and business services

Sectoral Opportunities

When compared to the export performance of comparator countries (Norway, Finland, Ireland and Denmark), China presents potential export opportunities in the following subsectors:

• Machinery and Equipment
• Manufacture of Computer, technology and optical equipment
• Food
• Chemical Sciences

Existing in-market support for Scottish businesses in China

Scottish Government Network of External Offices and Scottish Development International 

We have Scottish Government offices in key locations around the world that work to promote Scottish interests overseas and strengthen our relationships with key countries and continents. Our Scottish Affairs Office in Beijing promotes Scotland’s interests in China.

Staff in China are leading a sustained programme of engagement for the mutual benefit of both nations as detailed in our China Engagement Strategy. Scottish Government also has a Memorandum of understanding with China’s Ministry of Culture concerning the promotion of cultural collaboration and exchange.

Scottish Development International has 8 members of staff in Shanghai, Beijing, Hong Kong and Guangzhou focused on the consumer industries, science and technology and energy sectors. 

GlobalScot

There are currently 7 GlobalScots in China covering the energy and tourism sectors. China is a priority country for expansion of the GlobalScot network. 

Department for International Trade

Contact the Department for International Trade team in China for more information and advice on opportunities for doing business in China.

The British Chamber of Commerce in China can also offer member companies advice and introductions in Chinese markets through their office in Beijing.

University Links

18 Scottish Higher Education Institutions now have academic and research links with Chinese HEIs offering mutually beneficial research arrangements/study opportunities for students from Scotland and China, including:

A Memorandum of Understanding has been signed between the Edinburgh Centre for Robotics, which is run by Heriot Watt University and the University of Edinburgh, and The State Key Laboratory of Robotics in Shenyang.

The University of Glasgow is collaborating with Beijing University of Technology (BJUT) on a £2m, two year project part-funded by a grant from the Newton fund. The research will aim to address the challenges that hinders the commercialisation of renewable heat sources.

In 2018 Abertay University entered a 10-year strategic partnership with the major Chinabased entertainment and education company Perfect World with a view to sharing international expertise in the video games sector, training 100 Chinese students annually. The partnership will see the University – number one in Europe for computer games courses– deliver a new e-MProf (Executive Professional Masters in Games Development) in Beijing, while also exploring a range of future academic, research and business collaborations.

Human Rights

Respect for human rights and the rule of law is one of the key pillars of Scotland’s China Engagement Strategy. This means balancing economic development with social justice. The premise that increasing growth and tackling inequality are mutually supportive is at the heart of our engagement with China. 

We aim to work collaboratively and constructively with China – promoting our values through sharing practical learning and experiences – to encourage an open, honest dialogue. This work will help us to collectively address global challenges, contribute to the UN Sustainable Development Goals and support UN human rights treaties.

 

References:

(1) World Bank