Memorandum submitted by China Britain
Industrial Consortium
The China Britain Industrial Consortium (CBIC)
welcomes the opportunity to submit evidence to the Foreign Affairs
Select Committee's inquiry into the "Role and Policies of
the Foreign and Commonwealth Office (FCO) in relation to the People's
Republic of China".
CBIC was formed three years ago to assist its
members in their efforts to build relationships with Chinese industry
and those government agencies that determine industrial policy.
It does this by training managers from Chinese companies. These
are in the main from State Owned Enterprises (SOEs) where there
is a considerable need to improve management efficiency so that
the SOEs can be turned around and contribute to, rather than hinder,
China's continued economic growth. The benefit to CBIC members
is that they establish links with these enterprises and the individuals
that they have trained, and are seen as being good corporate citizens.
This will improve the prospects for their businesses in China.
CBIC currently has 16 members (see Appendix 1).
There are five training programmes:
— An annual seminar for approximately
150 senior managers, which is held in China.
— The Senior Management Industrial Strategy
Programme, which brings 30 senior managers to the UK for a three
week intensive course run in conjunction with Cranfield School
of Management.
— Scholarships for 12 MBAs at Cranfield
School of Management. The scholarships are joint funded with the
Foreign and Commonwealth Office's Chevening scheme and Cranfield
University.
— Placement programme for Chinese managers
to spend between three and six months with a CBIC member.
— Consultancy programme where CBIC members
place their experts in a Chinese company.
To date over 600 Chinese managers have benefited
from these programmes. The Consortium members are also seeing
benefits. A number of business opportunities have been identified
as a direct result of the contacts made during the training programmes
as well as improved relationships between British and Chinese
companies.
The funding for these activities comes from
members' subscriptions, currently £8,000 per annum, and a
small grant from British Trade International. British Trade International
has also supported the annual seminar with a separate grant. Overheads
are kept to a minimum and approximately 70 per cent of income
is spent on the training programmes. This compares very favourably
with other programmes where the proportion spent on overhead tends
to be much higher.
The State Economic and Trade Commission (SETC),
which equates to the United Kingdom's Department of Trade and
Industry (DTI) manages the Chinese side of the programme. They
have identified a number of SOEs to receive training through the
CBIC programme (see Appendix 2). There is a Memorandum of Understanding
(MoU) between SETC, DTI and CBIC, which covers these activities.
The MoU has a five year life, which is due to expire in April
2002. SETC have indicated that they would wish this initiative
to continue and negotiations on an extension for a further five
years are currently in hand.
CBIC receives support from the FCO in two particular
areas. Firstly, the Commercial Section of the British Embassy
in Beijing provides an invaluable link with SETC. This role is
particularly important, as the Chinese perceive this as a government
to government initiative. The Ambassador has personally involved
himself in a number of the Consortium's activities. This is most
welcome as it maintains the profile of the initiative and demonstrates
to the Chinese a high level of commitment from the UK side. The
Prime Minister, during his 1998 visit to China, included the annual
seminar in his programme. This was very much appreciated by the
Chinese and did much to strengthen the initiative. The benefit
of senior politicians participating in activities such as those
run by CBIC during their visits to China cannot be underestimated.
The second direct link with the FCO is through
the Scholarship programme. This programme is vital to the long-term
success of business in China, as it builds lasting relationships,
which bring both direct and indirect benefits to the sponsor companies
and to the United Kingdom in general. The FCO provides a one-third
contribution to the cost of each scholarship, which amounts to
approximately £10,000 per student. CBIC appreciates the FCO
support to the scheme. The tripartite funding of the scholarships
in effect means that, with 12 places per year at Cranfield, CBIC
is contributing some £120,000 to the overall Chevening programme.
The great advantage of the CBIC programme and
hence the ability to attract sponsorship, is that it matches students
with the business needs of the sponsors. For instance a British
electrical power generation company can select a scholar from
a Chinese power company with which it may wish to do business
in the future. This bespoke approach has a number of key advantages.
Firstly, it makes the justification of the investment easier,
particularly for individual budget holders within the sponsoring
company. Secondly, it is often possible during the student's time
in the United Kingdom, for him to undertake project work on behalf
of both his sponsor and parent company. This helps to build the
relationship between the two. Thirdly, there is a growing group
of alumni who are able to reinforce this bond and to promote their
sponsor's and British, interests. An annual alumni reunion is
held in China to help sustain these links. However, the selection
process would not be possible without the support of the British
Council's offices in Beijing. With its limited membership CBIC
would also not be able to sustain the number of scholarships that
Cranfield University is prepared to offer and therefore extends
this programme to other British companies. This year, for instance,
a total of 40 companies were approached in order to arrive at
12 sponsors, who are split approximately equally between members
and non-members.
Whilst all support to the Chevening scheme
is welcomed, there is concern that the particular means of expansion
of the Chevening programme announced by the Prime Minister late
last year may have a negative impact on the CBIC scholarships
unless it is carefully managed. The main cause for concern is
the request that business funds part of this expansion. This results
in competition for funds within companies and a situation where
"Peter is robbed to pay Paul". The result of this could
be an overall reduction in monies available to support Chevening.
It would also mean that the considerable benefits of the bespoke
scheme would be lost. The solution is to recognise programmes
such as that run by CBIC, as contributing to the success of Chevening
and promoting them as a means of increasing businesses' contribution
to the overall scheme.
The trend for government to seek funds from
business on an indiscriminate basis for initiatives in training
and other areas of relationship building is causing increasing
concern. This is threatening activities such as those run by CBIC,
which have demonstrated real benefit to both individual businesses
and the United Kingdom in general. There appears to be little
co-ordination between government departments. Examples are the
British Overseas Industrial Placement (Bond) Scheme, sponsored
by the DTI; the Financial Sector Training Scheme for China (FIST),
sponsored by the Treasury and the Department for International
Development (DfID), and the practical training scheme for Chinese
lawyers supported by the Lord Chancellor's Office and with which
DfID was involved. It is understood that there are a number of
other initiatives including the possibility of one from the Higher
Education Funding Council for England (HEFCE) which will have
Department for Education and Employment (DfEE) support. All of
these have sought financial contributions from business. This
is in addition to the UK-China Forum, which was formed last year.
The UK-China Forum looked to business to support its activities.
However, the benefit to business was difficult to determine and
its failure to achieve the required level of support clearly demonstrates
the problem of programmes that are not tightly focussed on specific
aims. In addition, unlike CBIC, many of these programmes have
very high overheads. That for FIST is over £3 million for
a two year programme. The result is likely to be "initiative
fatigue". It is already becoming increasingly difficult to
attract companies to join CBIC. There is considerable confusion
in China and loss of impact. A co-ordinated approach would have
a multiplier effect, to the benefit of the UK and all concerned.
CBIC seeks to work in this way for example developing links to
the UK/China Forum and to regional Chambers of Commerce.
As the lead government department it is suggested
that the FCO should act as the overall co-ordinator. An attempt
was made with the China Consultative Group, which was formed by
the China and Hong Kong Department in 1999. However, it has been
poorly supported by other government departments and has no authority.
Attendance has fallen and it appears to be losing its purpose.
This is an area that needs "joined up government" particularly
as United Kingdoms rivals such as Germany, France, Australia and
Canada are far better co-ordinated. France and Germany also appear
to be better able to access European Union (EU) funds. CBIC has
attempted this but without success. There was little support or
assistance from government departments to the CBIC attempt.
The formation of British Trade International
may have a positive impact on the management of these programmes.
However, it is still unclear how it will operate in this area
and whether it could effectively take on an inter-departmental
co-ordination task.
In conclusion, CBIC believes that it is delivering
real benefit to its members and to the overall relationship between
the United Kingdom and China. This it is doing in a cost efficient
manner. Training abroad is clearly recognised by the UK Government
as an important means of promoting UK trade, for example the recent
British Trade International Seminar at Lancaster House on the
subject, led by Sir David Wright. However, there is a danger that
its works could be damaged by "initiative fatigue" resulting
from government's unco-ordinated initiatives in the area of training
and relationship building. While many of these initiatives are
very valuable, a co-ordinated approach between government departments
would generate a multiplier effect. This would help the United
Kingdom compete with the level of effort being expended by its
commercial competitors. The FCO would be the logical department
to carry out this element of "joined-up government".
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