Can Chichester catch a Chinese cold?
As Chinese economic issues continue to ripple out across the world, I found myself wondering what impact a Chinese slowdown, or even meltdown could have on us here in Chichester.
If you are like me and often see these stories on the news and think to yourself that is too macro or far away to impact me, then it’s probably worth taking a moment to really consider just how connected we are to China in 2015.
China is the second largest import partner to the UK, just behind the US, and it has been growing at a steady rate for many years. With a number of major manufacturing, distribution and tech companies in this area we probably have a higher than average import rate of products or components than other parts of the UK.
Whilst the rest of the world was growing its GDP at an average of 2.8% per annum between 1993 and 2013, China was growing almost four times faster at around 10% per annum. This growth created increased demand for travel, imports (to China) and luxury goods, all factors which are catered for here in West Sussex, with major international air and sea ports and the presence of a luxury car manufacturer on our doorstep. Once you consider the supply chains to these businesses, you suddenly realise how many benefitted from the mega growth around the other side of the world.
Furthermore, Chichester is a tourism destination, attracting visitors from around the world. Any problem in China which dents their near $500bn of annual overseas tourist spending will hit the UK and as a destination within striking distance of London there would be a noticeable impact here in West Sussex.
I think the answer to the question ‘can Chichester catch a Chinese cold?’ is probably, not directly, but we may be part of a wider effect. The UK is still not in rude health, following its own economic issues, and in the same way you would not put an elderly relative or sick friend at risk of catching your cold, we have to understand our economic proximity to China does pose risks to us whilst we remain frail.
As ever, avoiding this risk is about structuring your business so that you are no more exposed in one market, client or product than any other. No single aspect of your business, be that country of trade or client, should equate to more than 30% of revenue and your business plan should have mitigation measures planned in case that client, contract or country suddenly stops, with limited or no warning.
*Source – Office for National Statistics and FT.com