Scottish Foreign Direct Investment in Scotland is increasing at a very significant rate. In 2015 it was up 51% from the previous year with 119 new projects.
Chinese companies are recognising the benefits of connecting with Scotland’s culture of research, innovation and creativity. In 2016 there were 10 major Chinese investors in Scotland, double the number from the previous year, and new connections mean this trend is expected to continue.
Scotland is attractive to inward investors and has one of the lowest tax rates in Europe. Strong connections between public and private sector in Scotland help to support incoming companies. And Scotland’s excellent academic tradition supports research and development. There is also a highly skilled workforce with contemporary skills in areas such as technology and manufacturing.
Ctrip buys skyscanner
A good example of China investment in Scotland was the high profile sale of Skyscanner in 2016. The Edinburgh-based technology company was sold to Ctrip, China’s largest online travel company for £1.4 billion. Skyscanner will continue to operate independently, based at the Edinburgh headquarters.
We were taken seriously from the start because we had the pedigree as a university spin-out. Our close connection with Edinburgh University has many benefits in terms of the quality of our research and development.
Rob Palfreyman, chief executive, sensewhere
Skyscanner currently receives around 60 million visitors per month. The company began 2016 by becoming one of only a few Scottish 'unicorn' companies – a new, high growth company worth more than £1 billion. By the end of the year, Skyscanner had been sold to Ctrip, a deal which is expected to allow the company to continue with its aim "of making travel search as simple as possible for travellers around the world.”
Skyscanner was founded by three graduates in 2001 to let users compare prices from different travel sites when searching for flights, hotels, and rental cars. The company has grown steadily, helped by acquisitions of other travel search companies, including Chinese travel search engine Youbibi in 2014.
Tencent in deal with sensewhere
In 2015, sensewhere, a Scottish software company secured a major investment from Tencent.
Tencent has now incorporated sensewhere’s indoor-positioning software into its mapping and instant-messaging apps, improving users’ ability to navigate in places such as shopping malls, where GPS doesn’t operate. The deal means Tencent can provide an indoor location solution for social media and gaming arenas, as well as the mobile advertising market.
“Our offer is most relevant to a large provider,” says sensewhere’s Chief Executive Rob Palfreyman, “so the scale of Tencent’s services is ideal with 600 – 800 million social media users. Our software uses crowd-sourced data and this is a fair-sized crowd.”
“We were taken seriously from the start because we had the pedigree as a university spin-out, with sound engineering at the heart of our offer. Our close connection with Edinburgh University has many benefits in terms of the quality of our research and development. It also means that we meet many post-graduate students from China who are studying in Scotland. We make the most of these opportunities to develop close ties between the two countries and recruit new staff for our growing business.
“Another important factor in our success was having the right support from the Scottish Government. Scottish Development International’s team in China were invaluable to us in developing the right local contacts.
“We now have our own offices in Shenzhen and Beijing as this on-the-ground presence is so important for fostering and maintaining relationships.”
Red Rock chooses Scotland
Another Chinese company that has recently chosen to invest in Scotland is power company Red Rock. In November 2017 the first minister opened the new Edinburgh offices of Chinese power company Red Rock Power Limited, a subsidiary of State Development and Investment Corporation (SDIC).
The state-owned investment holdings company plans to invest further in renewable developments in Scotland, building on its existing offshore wind projects. Red Rock’s decision to locate here is a vote of confidence in Scotland’s renewables sector. It is also a significant opportunity for Scottish supply chain companies in the sector to connect with renewable energy companies in China.
Scottish companies expanding into China
Peak Scientific is a great example of a successful Scottish company that has grown steadily over the last decade through a deliberate and effective internationalisation programme. In 2005 the business employed 40 people with a turnover of £5 million. Today it employs 380 people globally, with a turnover of over £40 million.
Above all, we build trust in our marketplace by being true to our brand promise - always doing the right thing by our customers.
Mark Flanagan, Peak Scientific
The company opened an office in Shanghai in 2012, and now employs over 40 staff directly within China in many different capacities including sales, service, finance and marketing. Peak say their success in China and elsewhere around the world comes from three main factors: reliable products; an unmatched service offering and hiring the right people.
Peak manufactures high performance gas generators for use in analytical laboratories. Their manufacturing skills are complemented by on-site technical support services from a team of highly trained field service engineers stationed in over 20 countries around the world.
Mark Flanagan of Peak Scientific comments, “Key to Peak’s success in China is in our unique approach to building long term partnerships with our customers and not simply chasing business at any cost. We see the purchase of our product as the start of that relationship with the customer, the real value add comes with the on-going service, support and product training over the lifetime of the product. Above all, we build trust in our marketplace by being true to our brand promise - always doing the right thing by our customers. In China in particular, understanding each regional market is crucial and that only comes about through employing honest, customer-focused and creative-thinking people to form a close working team that respect and reflect the core company values of Peak.”
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Scottish companies sensewhere and Peak Scientific have both won awards at the British Business Awards. These prestigious awards celebrate excellence in innovation, enterprise and endeavour from UK companies in China.
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