London's Jack Barclay Bentley dealership has hosted British aristocrats, Russian industrialists and Arab sheiks in its 87-year history. Until this year, it had never held a Chinese New Year celebration.
In February, the dealership invited more than 200 wealthy Chinese expatriates from fields like finance and real estate to a Year of the Horse-themed event under the slogan "take the reins for a prosperous journey." And, of course, Chinese-speaking staff were on hand, ready to rhapsodise about the pleasures of a car favoured by the royal family and rap stars alike.
"A quintessentially English dealership could be quite intimidating" for Chinese buyers, said Chris Harris, marketing director for luxury automotive group HR Owen, which owns Jack Barclay.
From luxury retailers to law firms to banks, Londoners are jockeying to take advantage of a wave of Chinese investment and tourism. With Russia, India and West Asia struggling with weak commodity prices, businesses that cater to wealthy foreigners are betting Chinese money can make up the difference.
The property sector is seeing some of the most dramatic increase, with real-estate investment in the British capital from China tripling from 2012 to 2013 to about $2.8 billion, a figure that will probably be matched this year, according to broker Knight Frank.
$20-million yachts
Chinese-financed projects include One Nine Elms, a 56-story apartment tower on the south bank of the Thames backed by developer Dalian Wanda. And Shanghai-based Greenland Holding Group this year said it would invest £1.2 billion pounds redeveloping a brewery in the city's leafy south-west and building a residential tower near Canary Wharf.
Chinese buyers are also taking their first steps into corporate dealmaking in Britain. In July, private equity firm Hony Capital said it would buy UK restaurant chain Pizza Express for about $1.4 billion - the largest-ever corporate takeover in Britain by a mainland Chinese company. The previous summer, Dalian Wanda agreed to pay $451 million for Sunseeker International, a London manufacturer of yachts that sell for as much as $20 million.
The increased presence is partly a function of China's diversifying economy, said Nicola Mayo, a partner at law firm Linklaters who just returned to London after four years in Shanghai. "China Inc is looking strategically at more sectors beyond natural resources."
Some companies are using British deals to strengthen their position back home. Investment firm Sanpower Group this year took control of House of Fraser in a transaction valuing the Oxford Street department store at £450 million; It's now planning dozens of branches in China. Pizza Express expects to build new restaurants in the Mainland as interest in Italian-style fare picks up there.
Prime Minister David Cameron has made a concerted effort to strengthen ties with China amid criticism from business leaders that Britain has slipped behind the US, Canada and Australia in courting Beijing. Chinese Prime Minister Li Keqiang joined Queen Elizabeth for tea when he visited London in June, and Chancellor of the Exchequer George Osborne is promoting a plan to make London a hub for trading China's yuan, for which the London Stock Exchange in June inked a "strategic partnership" with Bank of China Ltd.
Orange diamond
Two years ago, Boodles, a jeweller with five London stores, had no Chinese speakers on staff. Today it has two and is looking for a third as more than five per cent of its business now comes from Chinese shoppers, up from one per cent five years ago, says managing director Michael Wainwright. One Chinese customer who "we made a huge sale to last year wants an orange diamond," Wainwright said. "You're looking at a million pounds-plus. We know this person can spend this kind of money."
Chinese shoppers have accounted for a quarter of retail purchases by overseas visitors in London this year, according to duty-free shopping provider Global Blue - up from 14 per cent in 2012.
The Chinese wave is arriving as London weans itself from a dependence on wealthy Russians, who provided steady work both to professional-services firms and the luxury sector. Amid European Union sanctions over Ukraine, President Vladimir Putin's government has urged Russian companies to de-list from foreign stock exchanges and told billionaires to repatriate assets.
Passport-free travel
Obstacles remain to a whole-hearted embrace of China in London. The UK government recently criticised China's decision to block a delegation of British lawmakers from visiting Hong Kong as part of an inquiry into conditions in the former colony, which has been rocked by pro-democracy protests. And China's breakneck economic growth is slowing to below seven per cent as a housing boom slows, which could curtail foreign investment and tourism in the UK and elsewhere.
More prosaically, Heathrow airport has trailed Frankfurt and Paris in developing new routes to China because of runway capacity limits. Britain has captured just 14 per cent of the growth in flights from China to Europe over the last 20 years, with 34 per cent going to Germany and 22 per cent in France, figures from the Confederation of British Industry show.
mcampbell39@bloomberg.net
© Bloomberg
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