Opportunities for China–UK trade in a post-Brexit world

On the final day of 2020, at 11 pm (GMT), the UK finally completed its separation from the European Union (EU). This marked the end of a four-year wait, after 52% of British voters selected to leave the Union during that fateful referendum in June 2016. Whether you are now petitioning to celebrate the date as the UK’s new ‘Independence Day’, or still sobbing into your nice cup of tea as you despair the silliness of it all, the UK now has the potential to either seize the situation as a fantastic opportunity, or to slowly fade away from the international stage.

Although there was widespread relief when – with just days to spare – the UK and EU reached a trade agreement, some of the greatest opportunities lie beyond European borders. In particular, swiftly after leaving the EU, the UK Government acknowledged the importance of the Asia-Pacific by applying to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

"In future it's going to be Asia-Pacific countries in particular where the big markets are, where growing middle-class markets are, for British products," the UK’s International Trade Secretary Liz Truss told the BBC in January this year.

Although China is not [yet] part of the CPTPP, China is dominating the economic ecosystem in the region. Many companies around the world are dependent on Chinese manufacturers for raw materials and chemicals. Within the biological pharma sector specifically, it has been estimated that Chinese manufacturers make around 40% of all APIs used worldwide. China is home to a booming CDMO sector that boasts home-grown giants such as WuXi STA, while Lonza claims a 30-year heritage in the country. China also has a strong vaccine sector – although traditionally it has mostly produced vaccines for domestic use, ongoing demand for vaccine manufacturing facilities could drive growth in coming years.

Conversely, according to UK Government data (Department for International Trade, Trade and Investment Factsheets, 2021), medicinal and pharmaceutical products accounted for 7.4% of the UK’s exports to China in 2020, and China has emerged as the world’s largest single market for scientific instruments, many of which are used within the pharma industry. Last year, China was the UK’s third-largest trading partner, accounting for 6.7% of total UK trade. Especially post-COVID, this type of international trade is important to both countries’ economies, and it provides employment for a large number of people.

This explains the UK’s Department for International Trade positive attitude to China, as it has publicly stated that it encourages UK companies to export their products and services to China, and to “partner with Chinese companies”. Happily, China seems equally keen to establish good relationships, as evidenced by the appointment of Zheng Zeguang as the UK’s new Chinese Ambassador. Formerly China’s Vice Foreign Minister, the new Ambassador also previously played an integral role in the ‘Phase One’ trade deal between China and the USA last year. The appointment of such a high-profile personality to the UK is widely interpreted as an increased focus on UK–China relations, and the potential for post-Brexit trade.

As we stand poised at the start of the post-Brexit era, there is enormous potential for trade between the UK and China. Although a free trade deal seems unlikely in the near future (because to do so would require the UK to re-negotiate its existing trade deal with the EU), there would appear to be government interest and support on both sides. The UK’s thriving pharma sector is an attractive market for China’s API  manufacturers and CDMOs, while the UK already exports large quantities of medicinal and pharmaceutical products to China, as well as niche technologies and services to China’s scientific research and manufacturing communities.

One such UK company, Oxford Instruments plc, a provider of technology products and services to the world’s leading industrial and scientific research communities, has been expanding its capabilities and teams across Asia-Pacific and China. The company prides itself on supporting customers in addressing the world’s most pressing challenges, including improved healthcare and leaps in scientific understanding.

“The approach taken within Asia Pacific to contain the coronavirus allowed the region to recover quickly from the pandemic, which reduced disruption for our customers and end markets. We continue to see strong demand for our technology within a variety of markets and applications, including pharmaceutical, gene sequencing, brain research and life science imaging,” said Vice President of Sales & Service Asia, Jonathan Bryon.

China has been viewed for a number of recent years as a ‘rising star’ of the pharma industry. Notwithstanding political pressures – primarily from the US – founded on concerns over China’s growing dominance in the field, and the West’s increasing dependence on China for raw ingredients, the relatively lower manufacturing costs, availability of inexpensive skilled labour, and regulatory developments supporting the strength of the industry, have all combined to help China realise its potential in becoming a leading supplier for global pharma.

The next CPhI China (and its co-event, P-MEC China) will take place in December 2021, gathering thousands of exhibitors and visitors from across the world. I am optimistic that, this year, we will see a surge of interest from the UK, as more companies recognise the potential for UK–China trade.

Author biography

Sarah Harding, PhD

Sarah Harding worked as a medical writer and consultant in the pharmaceutical industry for 15 years, for the last 10 years of which she owned and ran her own medical communications agency that provided a range of services to blue-chip Pharma companies. She subsequently began a new career in publishing as Editor of Speciality Chemicals Magazine, and then Editorial Director at Chemicals Knowledge. She now focusses on providing independent writing and consultancy services to the pharmaceutical and speciality chemicals industry.