British business leaders expect sales to China to be worth ten per cent of their global revenues – equivalent to #200billion a year – by 2009, a survey has revealed.
The report, by management consultancy Hay Group, reveals UK business leaders are bullish about their prospects in China, with 85 per cent of British directors seeing the country as an overall business opportunity and more than a third (37 per cent) viewing it as the greatest opportunity facing their business.
A third (36 per cent) of major British companies have current operations in China with a further 16 per cent planning to establish operations within the next five years.
However, more companies (40 per cent) have no China strategy – against a global average of 24 per cent in the Waking Up To China study.
By contrast, all participating German businesses are operational in China or plan to be within five years.
Deborah Allday, associate director, Hay Group, said: "China is quite simply the greatest market on earth. Our research shows that British business leaders expect to double their sales to China within three years.
"But with 40 per cent of British companies lacking a China strategy, whether they have the capability to make this happen remains to be seen.
"Business leaders should put China top of the business agenda now, if they are not to lose out on sales there worth #200billion and be threatened in their home market by Chinese competitors."
The study, based on interviews with business leaders across Western Europe, North America and Asia Pacific, also revealed that global directors rank the UK second only to the US in terms of its capacity to succeed in China, with 63 per cent of global executives rating the UK "well placed".
By contrast, Italy was the most poorly rated country in terms of its capacity to be successful in China, ranked "poorly placed" by 36 per cent of executives, with France ranked "poorly placed" by 25 per cent.
UK business leaders expect Chinese competitors to steal just five per cent of their domestic market in the next three years – compared to a global average of eight per cent – the equivalent of #76billion a year, making China a net opportunity for Britain.
Despite concern about China from the global manufacturing community, with nearly a third (29 per cent) of bosses citing it as the greatest threat to their business, half of UK executives believe that such competition will never reduce profit margins by depressing the price of manufactured components (52 per cent) or finished goods (50 per cent), and more than a third believe China will never successfully compete for low-value (37 per cent) or high value (38 per cent) outsourced services.
Ms Allday said: "The greatest threat facing British business is complacency. There is a widespread belief amongst UK business leaders that China will only pose a threat to the most low value goods and services. They are mistaken.
"Chinese companies are scaling the value chain at speed and companies should beware of leaving their home goal unprotected.
"UK business leaders underestimate Chinese business acumen and ambition at their peril."