Analysis: North's Express Links to Orient; in Association with RBS the North-East Has Had More Chinese Investment Than Any Other Part of Europe outside London. Urmee Khan Looks at the Region's Links with the World's Fastest Growing Economy

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Byline: Urmee Khan

XINAO may not be a household name yet but they are one of the world's biggest energy companies, specialising in natural gas distribution and biochemicals.

Based in the province of Hebei, they are the largest private sector energy company in China.

Their European headquarters is a small office in Gateshead. It is one example of a growing set of links between the North-East and the world's fastest growing economy.

The Chinese presence in the North-East is long-standing and obvious. After all, it remains the case that Chinese people are the largest single ethnic minority in the region, a fact marked in the 80s by the formal establishment of Chinatown.

In the last three years alone, Newcastle has been the top spot for Chinese immigration into Britain with 1,360 new national insurance registrations.

What is less obvious to the casual observer is the ever deepening business links between the region and China. But these are extraordinary in their scale, in fact, outside London, the North-East is the area in Europe with the largest inward investment from China. An ever growing number of people from the North-East owe their living, although they may be unaware of it, to Chinese investment.

And this is unsurprising if one considers the global context. In many ways, China is no longer a developing world economic superpower - it already is one. Vast quantities of the United States national debt is held by the Chinese, making them key players in the global financial markets that dictate all of our lives. Throughout the world, especially in Africa, the Chinese are investing in the extraction of natural resources on an enormous scale, and preparing to unlock the productivity of their 1.3 billion-strong population.

As for manufacturing, their global penetration is already awesome - if you bought a cheap piece of electrical equipment any time in the last three years, have a look at where it was made. The centre of world economic power has shifted east and those countries and regions that can organise strategically for it are better placed to thrive in changed conditions.

It was partly with this in mind that in last few years the regional development agency One NorthEast has been successfully cultivating links with Chinese companies. Over the last 10 years, there have been around 50 Chinese inward investments to the area - a figure higher than anywhere in Europe bar London, according to a survey by Ernst & Young a year ago. Now One NorthEast maintains a permanent office in the Chinese industrial hub of Shanghai.

Simon Goon, head of business investment at One NorthEast, said: "We went in early and proved our credibility and now we're reaping the rewards.

The Chinese business community is adding tremendous value to the region."

The political situation in China means that there has been a restriction in the amount of inward investment allowed. Unlike India, Chinese companies are restricted by the amount they can offshore. Chris Fraser, managing director, ChinaEuro Associates, a consultancy company working very hard to attract investment from China with the inward investment team with an office in Shanghai. They have also done a lot of exchange of visits and implemented a 'soft landing scheme' to support the investors from China," he said.

"There have also been discussions with Newcastle University about research links. The digital media in this region is developing very fast with advanced computer games. It is a very exciting time to be a Chinese business in the North-East."

Dr Zhu came to the North-East in 1996. "I think that the main difference with the people that came from Hong Kong in the 50s is that they tried to establish themselves in the catering industry and opened takeaways. But now the people coming from mainland China are the business people who have business experience and are impatient to develop. …


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