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East Asia

Yes, and not just to those building coal-fired power stations. On every visit I make, I meet with Ministers and business communities. In some instances, where we can, we make a link-up between the business community here—which has the knowledge and technology arrangements—and potential partners in the countries that I am visiting. Consequently, there are a number of new initiatives that have been launched in Australia and New Zealand at Governmental and business-led level following my visits. The same is true in Korea and I have made similar offers to India, Russia and, of course, to China. Such initiatives are a core part of my activities in the Foreign Office, and since her appointment, my right hon. Friend the Foreign Secretary has placed those issues at the heart of her diplomatic and business activities. Indeed, I am appearing before the Foreign Affairs Committee next week or the week after to share the work of the FCO in those areas. I am happy to share any information that I provide here with the Committee. Many points were made about our investment in business support in China. I will deal with that generally and then talk specifically about the new facilities that we are putting into China. Hon. Members made an important point: China is not just the eastern seaboard, the Pearl Delta or Hong Kong. As I said yesterday in Committee, I have visited parts of China that have a population the size of Germany and a land mass the size of France. There are cities that people have never heard of that have international airports and infrastructure projects larger than anything in Europe; and they are getting bigger. There is a thirst for research and development, for education and educational activity at college level and at the level of higher and further education. There is also a thirst for the skills that people need to deliver economic advancements. China does not simply want to make cuddly teddy bears. It is a complete misconception to think that China’s only ambition is to make the toys of the world. Clearly, its ambition is to go upmarket and it can and is doing that. One of the biggest chances for investment that we will have over the next few years will stem from China’s recognition of our universities as world leaders and of our capacity for investment. China will recognise that we have already moved upmarket because of the pressure on us from globalisation. We have the capacity for manufacturing and new technology bases. In partnership, we can work with China on research and development and get into different market places. There are huge opportunities for us in China, but we have to recognise something else about globalisation: Government structures cannot be kept as they were five years ago, never mind ten years ago. UKTI is a good organisation as it was when I was responsible for it following when the original body was set up by Michael Heseltine, which was when I came in as a Minister after the 1997 election. UKTI’s strengths and challenges then are nothing compared with what they are now. That is not just because of new and emerging markets. The traditional markets of Europe and north America are changing because of globalisation. To put resources in the north-east of the United States misses an important factor: that new technologies and economies in the United States have moved to the west coast, the south-west coast and the southern belt. When we reorganise the UKTI in the areas that we have indicated, we must take account of the changing nature of the markets that we need to work in—whether it is a traditional market or an emerging market. We need to recognise who we are trying to help on the ground in terms of being entrepreneurial and giving tailored support services to individual companies or sectors. We also need to provide after-care and to use our diplomatic skills to advance our economic interests. The skill mix of people working in the UKTI and the Foreign Office must change. We have to multitask and multiskill our staff, have more people working in partnerships, and more people with the relevant knowledge based inside a particular country working for us and our interests. We are making a big change around, but it is better to change now, when we have the strength to do so and a really good organisation to help make that change, than to wait five years and see that, through globalisation, markets have changed dramatically and that our people and our resources are in the wrong place. On single gateway access, in some instances that is the right approach and the right market, but the resources have to reflect the nature of the market. Simply having lots of people in Beijing, which is four hours away from the most improving market in China is missing a trick. We have to get into those markets effectively and it is important that we have a hub and spoke strategy. We have a clear presence in Beijing and Shanghai, but we should work in partnership in other key areas that see us as partners. There are powerful regions in China that are bigger than most of the economies in the world and will continue to be so and there are people who want to be respected in the business and political community. Therefore we must treat the situation seriously. That is why the changes in UKTI have been made—skill changes, deployment changes and structure changes. Over the next few years, whenever someone visits a British embassy or high commission they will see that the staff have all or part of the skills to deliver services to our business community. We must consider what other organisations across the public and private sector would add value to the activities of the UKTI. There must be better co-ordination and ways of ensuring that other organisations accept the business objectives we are trying to achieve and will work with us in the role that we are playing in those markets. We are improving services not just for large companies, but for small and medium-sized companies—they have to go global quicker than ever before. We must tailor services and support for small and medium-sized enterprises as well as the big boys such as BP or British Gas. The changes that we are making in UKTI are important and I hope that I have explained the reasons for them. The consultations that we had with British business before we made changes suggested that those changes were appreciated. There is commonality and support for the changes that have taken place. Consequently, over the next few years, despite the challenges, I hope that UKTI will do its best by British business and will be successful with British business. As I have not yet made the announcement I will not mention it now to be fair to the company and the country concerned, but only yesterday, because of almost a year of UKTI activity in a major market place and work by people on the ground, at the embassy, with the company, with me, in the UK, in the country concerned and with the Chinese Trade Minister, we have for the first time secured a £2.8 billion infrastructure project. There is the potential for further projects down the line. That did not take place at a single meeting; we had to have the skills and the knowledge base at post. The company had to have someone in post who knew the industry, the sector and had the skills and knowledge to negotiate on behalf of the company. That is that kind of tailored business support service that we need more of. Business diplomacy is as important as defence diplomacy in terms of a globalised world.