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LEPs and Chinese Provincial Government

Launched by Secretary of State Eric Pickles in 2010, LEP’s have been gaining momentum within the UK bringing together businesses and local authorities, cities and counties. The Partnerships help economic growth in a way that is vastly different from any structures that exist within Chinese economic growth strategies. The vision behind the LEPs in the UK is that business people are the best people to trade and drive the UK economy forward.

The LEPs are now fulfilling the role of what was previously government run regional economic development. The public/ private sector cooperation model, can be the key to successful trade with other countries, particularly with China; an approach that fits with the UK government’s strategy for economic growth.

Anyone who has ever attended a meeting in a Chinese business or government environment, will be familiar with the protocol that sees equals (or nearest) sitting opposite each other. The structure is much the same in China, so when creating economy or market-driving projects, the pairing of Regional Authority counterparts must be considered. We all know that in Anglo-Sino business relationships, government support, particularly from China, can often be the key to success with any large project .

The challenge is that in China, central government (the policy makers) hold good counterpart relationships with learned colleagues in UK. There are also strong city and county government relationships, and in particular Economic Development Zones in China match well with UK county and district councils economic development teams.

Where the issue lies, however, is the jump from UK central government to county councils, thus in China, the provincial government is bi passed, and has no obvious UK equal (a multi county/city regional Government). The solution surely is that the LEPs around the UK can play a pivotal role in further developing relationships between the provincial government in China and the UK’s multi-county/multiple-city regions.  For this reason many conversations have been held in China at provincial level where some UK companies have organised and facilitated meetings to discuss higher levels of cooperation between Chinese provincial governments and UK LEP public /private partnership leaders.

The task of explaining LEP’s to a China audience, however, was daunting. Firstly, the vast differences between European and Chinese government culture needed to be considered.

Run since 1949 by the Communist Party, China operates a dual leadership system where each local Bureau or Office is under the authority of the local leader and the leader at the next level in the hierarchical system. Voters elect members of the People’s Congress at local level and they, in turn, elect members to the People’s Provincial Congress. This Congress then elects members to the National People’s Congress that meets in Beijing every year in March. The President of China is the head of state, serving as the Chairman under the National People’s Congress.

Having never previously encountered LEP’s, Chinese officials initially needed to learn and understand their role. With no LEP equivalent, the challenge has been to show that the UK LEP system of Government and private sector working together, can be an effective economic growth formula, and a great deal of time has been spent talking to the provincial governments, who have powerful influence in the arrangement of those crucial introductions to economy-driving private sector enterprise in China. Putting across the message that although the LEP’s are not run by the UK Government, they are supported by UK central Government and can indeed be the missing link for regional/provincial pairing.

Many meetings and extensive networking have finally paid off; the importance of an inclusive relationship between public sector and the business community, with government backing, is being successfully conveyed within China and the message is spreading; the provincial governments are showing a willingness to link to LEPs.

Much of the talk has centered on explaining the structure of UK government – a central government at the top, leading to county, then to district (often encompassing city) and finally to districts and parishes etc. In addition, much work has been put into opening out the work of LEP’s and their relationship within industry and governments.

The way forward is becoming clearer and more optimistic for all concerned which can only be very good news for industry in the UK and China.

Setting up a Business in China? You may want to consider a WFOE

A Wholly Foreign-Owned Enterprise (WFOE, sometimes incorrectly WOFE) is an incorporated foreign-owned limited liability company in China. A WFOE could be an essential first step in starting your business with China, for the purposes of raising invoices, paying suppliers, having a Chinese bank account, employing local staff and indeed credibility in the market.

Two main options for building a business in China include,

1) Start a company with a Chinese partner who will own more than 50% of the company (there are obvious disadvantages here)
2) Start a WFOE – You own this company 100%

There are various types of WFOE: