Chinese banks and companies that have a presence in the United Kingdom as a gateway to Europe will feel short-term pain following Friday's vote, but will likely take more time before finalizing their post-Brexit strategy. (Photo provided to China Daily)
Chinese companies will likely adopt a wait-and-watch approach following Friday's startling outcome of the vote on 'Brexit', an abbreviation of the impending "Britain's exit" from the European Union.
They will cautiously weigh their plans for future investments in Britain as the real impact of Brexit remains to be seen, experts said over the weekend.
Chinese companies that already have a significant presence in Britain, and those intending to use the country as a gateway to continental Europe, will feel immediate pain. For, Brexit is expected to place barriers to their access, increasing their cost of doing business in Europe.
The expected two-year protracted negotiations before Brexit will cast uncertainty over trade and investment talks with the bloc and will, in turn, adversely affect Chinese business, experts said.
"Chinese companies that use Britain to gain access to the EU market will encounter fresh issues including tax, labor mobility and legal aspects. These companies will consider setting up additional offices in the European continent," He Weiwen, a researcher at Chongyang Institute for Financial Studies at Renmin University in Beijing, told Chinese tabloid Global Times.
In recent years, Britain has become the top European destination for Chinese outbound investment. In the United Kingdom, Chinese firms have substantial exposure to several sectors, including infrastructure, real estate, nuclear power and financial services.
Chinese technology firms such as Huawei and Tencent have research and development centers in Britain.
China's overall non-financial direct investment in the UK exceeds $13 billion. The UK is also the second-largest trading partner of China within the EU with two-way trade volume set to reach $100 billion.
Li Ka-shing, business tycoon and Hong Kong's richest man, warned before the vote that he would scale back his investment in the UK should Brexit come to pass as "it would be detrimental to the UK and it will have a negative impact on the whole of Europe".
