UK firms ‘must begin trading with Asia to thrive in future’

Former CBI chief and trade minister Lord Digby Jones has urged UK manufacturers to begin trading with Asia and other emerging markets to thrive in the future.

In an interview with the Bolt, Clearwater Corporate Finance’s commentary on the industrials sector, Jones is said to provide a defence of the UK manufacturing industry, arguing Britain is still world class.

However, he makes it clear that businesses must innovate and take risks, adding that Chinese investors buying up UK targets will soon become commonplace.

Jones said: ‘You cannot stand still; you cannot tread water. You have to get off your bottom, get out to Brazil, get out to Asia, go and win new markets. If you rely on declining markets such as western Europe, you are going to have a problem.

‘There is someone in China who in the next five years will move from being working class to middle class. I want his first car to be a MINI made in Oxford; for him to aspire to own a Jaguar made in Birmingham. I’d like him to move to a bigger house built by a JCB.’

Meanwhile, insisting that China’s economy is ‘green going amber, not amber going red’, Jones said the country’s investors will be hungry for western assets and expertise in the coming years.

‘They’ve got to go up the value-add chain and they either do that by developing their own business or by buying someone who is already doing it. Over the next decade, we will see the Chinese buying into businesses across western Europe and the US in a number of sectors.’

Jones, CBI director-general from 2001 to 2006 and trade minister from 2007 to 2008, holds a number of directorships, including chairman of Triumph Motors and non-executive director of Flybe.

Recent analysis of the industrials sector by Clearwater found that the majority of UK transactions involving acquirers from overseas originated in mainland Europe and North America.

However, there is said to be growing interest in UK industrials expertise from investors in emerging markets.

‘We have been to China this year and the appetite there for western expertise is enormous,’ said Jon Hustler, a partner in Clearwater’s industrials sector team. ‘Emerging market investors are sizing up UK businesses and in the next few years we expect to see deal flow in that area ramped up considerably.’