Analysis: Chinese companies increasingly optimistic over trading in UK

Chinese companies are more optimistic about trading in Britain than at any point in the past five years, according to a new report published by the China Chamber of Commerce in the UK (CCCUK). 

The non-profit organization, which represents the interests of Chinese enterprises operating in Britain, described the business outlook as "positive" with 92 percent of firms expecting stable or increased revenue over the next two years.

Based on a survey of CCCUK members, the report found that 53 percent of Chinese companies operating in the UK are profitable – the highest figure recorded since the survey began in 2020 – while the proportion of firms reporting losses has dropped to a record low of 21 percent.

Despite these positive indicators, the report warns of a potential "slight contraction" in the economic contribution of Chinese businesses to the UK economy. The largest 931 Chinese companies generated $124.5 billion in revenue in 2024, marking a 4 percent decline from the previous year. Additionally, employment figures have fallen by 3.4 percent, with total staff numbers decreasing last year to 57,135 from the previous year's 59,155.

Chinese firms also reported facing "difficulties and volatility" in conducting business in the UK. Perceptions of the business environment have reached a "historic low," with concerns over the cost of living at their highest levels since 2020 and ongoing labour shortages affecting 51 percent of surveyed companies.

Despite that, collaborations between Chinese and British firms are rising, with 62 percent of companies partnering with UK businesses in the past year. Additionally, 64 percent plan to explore new partnerships, particularly in marketing, R&D and sustainability. Around 43 percent of firms see UK collaborations as a means to access broader European markets.

The report emphasizes that this year's findings "come at a critical juncture." Conducted before the new Labour government took office, the survey revealed that 58 percent of firms believed UK-China relations had deteriorated over the past year, while 67 percent identified the complex geopolitical landscape as a key challenge. 

However, the report notes "significant improvements" in diplomatic relations since Keir Starmer became Prime Minister. It highlights key developments, including Starmer's first official phone call with Chinese President Xi Jinping in August 2024 and Chancellor Rachel Reeves' January 2025 visit to China to reopen economic dialogue between the two nations.

Speaking at the launch of the report in central London, Minister for Economic and Commercial Affairs at the Chinese Embassy in the UK, Yu Benlin, described the report as "timely" given the progress achieved in bilateral relations over the last few months, and stressed that China is "fully committed" to further opening up restrictions on foreign investment and manufacturing, and expanding access to the service trade market.

Overall, while challenges remain, Chinese enterprises in the UK are cautiously optimistic about future business prospects, with hopes for a more stable and cooperative economic relationship between the two countries.