The knock-on effects on revenue for a business' UK headquarters could lead
to them lowering their projected investment into China to guard against
cashflow or revenue issues. Businesses operating in China should ensure
therefore that they maintain close communication with their head office on
future planning throughout the post-Brexit adjustment period. Even if British
businesses in China are confident that they will not be heavily impacted by a
no-deal Brexit, Duncan Levesley, of Grant Thornton’s China Britain Services
Group, nevertheless advises them to clearly communicate with customers
and staff about why they will not be affected, citing one firm that lost
business because they failed to reassure a client that they would not be
adversely affected post-Brexit. To gain an understanding of how a potential
slump in GDP may play out, Mr Rathborn advises that organisations review
the impact of the global financial crisis on their operations and establish if
there are any lessons to be learned.
4. Watch the exchange rate
It remains unclear what form the UK's post-Brexit international trading
relationships will take, presenting a key challenge for business. The lack of
available information makes it difficult for firms to assess their future
strategies, and misguided investment choices could have a serious impact on
the success of overseas ventures. Market jitters in the wake of Brexit are
likely to lead to a drop in the value of sterling, which reduces the purchasing
power of companies in the UK. However, this should not directly affect
operations in China and may also be an opportunity as it will reduce the price
of UK exports. Duncan Levesley points out that cheaper assets can also make
the UK a more attractive destination for foreign investment.
BRITCHAM POLICY INSIGHTS| PAGE 4