China – The Isle of Man Proposition
Head of Special Projects
The Department of Economic Development’s (DED) strategy for developing business in China has identified effective ways of accessing the growing Chinese economy with the aim of helping reinforce the geographic diversification in the Island’s own economy.
The positioning and acceptance in China of the Isle of Man as a reputable international business centre is partly dependent upon building relations at government level to demonstrate economic benefits of the Isle of Man’s EU import/export capabilities.
The facilitation of bilateral trade can also dispel any negative preconceptions associated with the perception that the Island may be ‘just another offshore centre’.
Central to the Isle of Man offer is our established Entry Processing Unit (EPU) - which given our efficient Customs and VAT office - provides us with a distinguished standard of customer service compared to our competitors; with the UK’s Treaty of Accession to the EU; ensures our free trade access for goods and agricultural products produced or supplied by the Isle of Man; tax neutrality, benefitting those seeking an attractive base for operations. In addition, the Island has a wealth of financial and professional services, helping facilitate trade into the EU and the option of virtual ‘turnkey’ solutions for import/export administration.
By establishing this type of business in the Isle of Man, the Island may ultimately grow into a European sales base, which sits well with the Chinese ‘Going Global’ policy. In addition, such business and its shareholders may well use the Island for other well-established propositions, such as listing on stock markets, wealth management or asset structuring (subject to the legality of capital movements and any necessary approvals in China).
Importantly, the Isle of Man is within the EU indirect tax area, allowing market access and customs clearance from a well-positioned trading base in the centre of the British Isles and on the doorstep of Europe.
In the next three to five years, the European Union (EU) will be implementing a free trade agreement between the member states of the Customs Union (CU) and the countries of the European Free Trade Association (EFTA), strengthening existing trade relations and creating new opportunities for co-operation.
To aid this growth in China, the DED now has a representative in China, who is helping to cultivate and target companies, entrepreneurs and creating networking opportunities to build awareness of the Island. We have also built Mandarin webpages and resources adjacent to our Isle of Man Where You Can website to support our communications.
In January, the first of several businesses being cultivated by the Isle of Man Country Strategy Team confirmed their intention to set up a subsidiary business on the Island to manage exports from China.
The DED’s most recent visit to China in November 2012 highlighted the possibility of working with a broader network like government and chamber bodies in Shanghai and Guangzhou, which may help the Isle of Man to draw on SME manufacturing and exportation membership opportunities from those areas. There have already been a number of Chinese delegations of entrepreneurs who have been attracted to visit the Isle of Man.
In April 2013 a mini trade mission - headed by Economic Development Minister John Shimmin – was undertaken. Isle of Man industry attendees who participated in the trade visit to China were able to showcase one or more propositions to sell which they have already established as being a ‘good fit’ with Chinese opportunities.
Hong Kong is an important market for Chinese Initial Public Offers (IPOs) and the Isle of Man can help foreign companies list overseas on the Hong Kong Stock Exchange since 2010 when we gained acceptance there. However, the Island‘s track record is best illustrated by the number of companies it has on London’s AIM market. Presently such market activity is quiet, but may present some opportunities in the future.
Beijing is the pre-eminent and established centre in China for a diverse range of commerce and head offices, but Shanghai is key for financial services, banking and technology exportation and other cities like Guangzhou and Shenzhen are also key centres of activity such as manufacturing for export.
In January, Shanghai officials stated their intention to create Mainland China’s first free trade zone in a three-year development project – approved by the central government.
The Shanghai Pudong Free Trade Zone is expected to offer foreign-denominated offshore banking; financial leasing; cross-border financing; and international trade settlements, yielding considerable economic and political benefits.
This may improve relations between the Isle of Man and organisational head offices in Shanghai, who already have long-established relationships for other partnering and overseas activity. The Isle of Man scores over the BVI, Cayman Islands and the Channel Isles by offering a practical physical base for real Chinese operations.
Improving our business relations with China will help us to fight for a share in the world's fastest-growing consumer and B2B markets.
The Department of Economic Development is already playing its part in the improvement of business relations with China which could emphatically become linked to the success of Manx businesses and growth to support the Island’s glowing future.