- Dec. 09, 2021 - The United Kingdom is a country with a very good business environment, and has been named "the best country in the world to do business" by Forbes magazine for several consecutive years.
At a time when the domestic Internet dividend has peaked, more and more Chinese entrepreneurs and investors have begun to pay attention to "globalization". In 2021, 36Kr will continue to launch a globalization manual to explain the basic appearance, human environment, market characteristics and entrepreneurial opportunities of European countries such as Germany, France and the United Kingdom one by one. After understanding Germany and France successively, this article will take readers to understand the "British Isles" across the sea from France.
Located in the northwest corner of Europe, the United Kingdom is a highly developed country and the second largest economy in Europe. Its citizens have a very high standard of living and a good social security system. This country with an area of about 240,000 square kilometers and close to China's Guangxi province is home to well-known giants such as Virgin Group, HSBC, AstraZeneca, Vodafone, and 37 unicorn companies, ranking first among the four largest economies in Europe.
So how did Britain become an "empire where the sun never sets"? What are the pillar industries? What about the venture capital environment? Today, let's find the answer together.
Basic information of the country
Geography and history
The United Kingdom of Great Britain and Northern Ireland, the full name of the United Kingdom of Great Britain and Northern Ireland, is an island nation of England, Wales, Scotland, and Northern Ireland on the island of Great Britain, with an area of about 240,000 square kilometers.
Source: Encyclopedia Britannica
In fact, the "formation" of Britain went through a long and complex process.
Historically, the British Isles were ruled by the mighty Roman Empire for more than 300 years, and by the Middle Ages, the Danes and Anglo-Saxons (a Germanic tribe) fought here for centuries. It was not until 1066 that the Normandy dynasty was established and the period of kingship officially arrived. After several dynasties, in 1917, the current Queen's great-grandfather, George V, created the Windsor Dynasty, which continues to this day.
Population and age
According to the World Bank's 2020 statistics, the population of the United Kingdom is about 67 million, which is basically the same as the population of France. Although china's population is only about 5%, the UK has more than 80% of the urban population and is a highly urbanized country. At the same time, compared with Germany, Italy and France, the United Kingdom is also the "youngest" country among the four largest economies, with a median age of 40.5 years, compared with the oldest Germany, the median age of the United Kingdom is nearly 7 years younger.
educate
The UK is a country that attaches great importance to universal access to education, and according to the United Nations Association (UNA-UK), the literacy rate in the UK has reached 99%. Not only are the world's top universities such as Oxford University, Cambridge University, and Imperial College, but also prestigious secondary schools such as Eton College, Queen Elizabeth College and Harrow College in the United Kingdom.
It is reported that the British education system is mainly divided into four parts: Primary Education, Secondary Education, Continuing Education (or Further Education) and Higher Education. Unlike the nine-year compulsory education in China, Compulsory Education in the UK is twelve years old, from the age of 5 to 16. In the last two years of secondary school, students in the UK begin to prepare for the GCSE (General Certificate of Secondary Education) exam (similar to the Chinese secondary school entrance examination).
After obtaining GCSE, UK students can choose to continue their education, pursue an A-Level course, or choose to attend a vocational school. Unlike chinese high school courses, A-Level courses are usually 2 years, and the subject classification is very detailed, including sociology, psychology, economics, law, etc., which is equivalent to the basic courses of the university. Higher education in the UK includes undergraduate, master's and doctoral degrees. Among them, the undergraduate system of universities in the United Kingdom is generally 3 years, and the universities in Scotland are usually 4 years.
Economic and entrepreneurial ecology
Britain is an old capitalist country, and after the famous Industrial Revolution, Britain quickly rose to become the "world's largest power", and was even once called "the empire of the sun never sets". In 2019, Brexit has become a global topic, and the impact of the epidemic has caused a big impact on the British economy, causing its GDP in 2020 to fall by 9.9%.
From the perspective of the venture capital environment, the United Kingdom has always been regarded as a country with a very good business environment, and has even been rated by Forbes magazine as "the most suitable country in the world for doing business" for several consecutive years, and its capital London is not only a global financial center, but also one of the top entrepreneurial centers. At the same time, the UK is also one of the "most gold-sucking" countries in the world. According to research published by Deerrum and the London Development Agency, in 2020, London start-ups and growth companies raised a total of $10.5 billion, accounting for a quarter of all investment in Europe.
Economic situation
In summary, the UK is one of the wealthiest, most economically developed and most standard of living countries in the world. According to the World Bank's 2020 statistics, the UK's gross domestic product (GDP) is about 2.7 trillion yuan, ranking fifth in the world and second in Europe, after Germany. However, both Brexit and the pandemic have had an impact on the UK economy. According to data released by the Office for National Statistics, THE UK GDP shrank by 9.9% in 2020, the largest decline since 1709.
Judging from the living standards of the British people, the United Kingdom belongs to the high-income countries. According to IMF data in 2021, the country's per capita GDP is the second highest among the four largest European economies– Germany, the United Kingdom, France and Italy, with a GDP per capita of $46,000, behind Germany at $50,700. However, in the past 10 years, the gap between rich and poor among British citizens has widened. According to the Uk's Office for National Statistics, from FY2011 to FY2020, the share of income of the wealthy class, which accounts for 1% of the population, increased from 7% to 8.3%.
Industrial structure
When it comes to industrial structure, as a former industrial power and today's service industry power, Britain's pillar industries have also undergone a process of transition from industry to service industry.
It is understood that since the first industrial revolution (18th century), as the birthplace of the United Kingdom has rapidly transformed from an agrarian society to the world's premier industrial power, industry has also become the country's economic foundation. However, after World War II, with the advent of the wave of new technological changes, the United Kingdom, which adhered to the advantages of traditional industry, was overtaken by countries such as the United States, Germany and Japan, which actively promoted technological innovation. Coupled with the outbreak of the first oil crisis and two economic recessions, the United Kingdom, which was hit by multiple blows, finally accelerated its transformation from industry to service industry in the 1980s and 1990s.
Today, after decades of development, the service sector has become the UK's most important pillar industry, according to the GOV.UK, in 2020, the service sector accounted for about 71.3% of its GDP, compared with only about 17.4% of industry.
Specifically, the UK's services sector radiates a wide range of sectors, including tourism, financial services, business services, retail and consumer-centric related industries. Among them, the financial industry in the United Kingdom is very developed, and the capital London is also one of the most important financial centers in the world. It is understood that London is the world's largest foreign exchange market, the largest gold spot trading market, the largest derivatives trading market, in addition, more than 500 multinational banks, more than 170 international securities companies set up branches or offices in London. The pandemic has had a huge impact on the UK service sector, particularly in the food and beverage and tourism sectors. According to the Uk Purchasing Managers' Index (PMI) data released by UK information provider IHS Markett for March 2020, the service sector has far outperformed expectations. Compared with 53.2 in February, the service industry PMI in March was 35.7, falling below the boom-bust line of 50 and hitting a record low.
Entrepreneurial environment
The UK is a country with a very good business environment and a "mecca" for entrepreneurship. According to the House of Commons Library, there are 665495 newly established start-ups in the UK in 2019-2020, which is equivalent to an average of 1823 businesses per day. According to CB Insights, as of November 2021, there are 37 unicorns in the UK, the largest number of countries among the four largest economies.
Not only that, every year, Forbes will combine 15 indicators such as property rights, innovation environment, tax system, technology, labor, corruption, investment protection and quality of life to select the most suitable countries for doing business, and the United Kingdom has won the crown for several consecutive years, becoming the "most suitable country in the world for doing business". In the 2020 rankings, the UK is the only european four largest economies on the list. So, what creates such a good entrepreneurial environment in the UK?
First of all, it is easy, fast and easy to register a company in the UK, and the threshold is low. According to the World Bank, it takes only 13 days in the UK to set up a company and start a business, compared to an average of 32 days in the rest of Europe. At the same time, the registration standards of British companies are relatively low, and there are no restrictions on the country and registered capital of the registrant.
Secondly, the low tax rate is also the reason why the UK has been able to attract a large number of entrepreneurs. In recent years, in order to alleviate the impact of Brexit and the epidemic on the country's economy and society, the British government plans to attract entrepreneurs through a series of preferential tax policies to stimulate the economy. Among them, the government plans to attract businesses by reducing the corporate income tax from the original 19% to 12.5%, which is the third cut since 2017. Today, the UK has one of the lowest rates in the developed world.
Third, the UK has a sound infrastructure and an advanced communications network. According to the 2020 data from the Office for National Statistics, internet penetration in the UK has reached 92%. In addition, the UK has a world-class transport network and has become a hub for the rest of Europe and around the world.
Fourth, the UK's talent pool is also very perfect, according to the Times Higher Education World University Rankings, oxford and Cambridge universities in the UNITED Kingdom have been selected in the top 10 in the world rankings, and Oxford University has been at the top of the list for several consecutive years. In addition, a dozen universities in the UK are in the top 100 of the world rankings.
Popular tracks
When it comes to the UK's hot industries, fintech is still the area of most attention. At the same time, industries such as smart manufacturing, chemicals and pharmaceuticals, and aerospace are still hot. With the UK's emphasis on "environmental protection" and life sciences, industries related to environmental protection, energy and human health are now also popular tracks.
Under the impact of the epidemic, the offline retail industry has been hit hard, but the online retail business has grown significantly in 2020. According to Martin Jones, a partner at UHY Hacker Young, in the second quarter of 2020 (during the first lockdown), an average of 4613 new online retail businesses opened in the UK each month, an increase of 66% from the monthly average for 2019 (2783). In January 2021, online spending also hit a record high of 36% of overall retail spending in the UK.
According to CB Insights, as of November 2021, of the 37 unicorns in the UK, 22 are from the fintech track, 3 are related to e-commerce retail, and there are 3 companies related to health, insurance and energy.
Investment situation
Looking at investment, according to Crunchbase, the UK raised $14.9 billion in 2020, or 37% of the European total. There are many active venture capital institutions. According to British business media GrowthBusiness, the most active UK venture capital institution last year was Seedcamp, which completed 92 investments. In addition, the country's active venture capital includes Index Ventures, Octopus Ventures, SFC Capital, Balderton Capital, LocalGlobe, Scottish Equity Partners, Atlantic Bridge and 7percent Ventures, among others.
In addition, the total amount of financing for European start-ups increased by only 2% in 2020, with a year-on-year increase of 2% in the UK and Italy, 9% in France and a 7% decline in Germany.
Source: 2020 French Technology Ventures Report
In terms of foreign direct investment (FDI), the UK Department for International Trade (DIT) released the 2020-2021 Foreign Direct Investment Report showing that in 2020, due to the impact of the epidemic, the number of FDI transactions in the UK will be 17% lower than in 2019, instead of the previous forecast of 30%-45%. FDI also created and retained around 74,000 jobs in the UK. Among them, new jobs in biotechnology and pharmaceuticals increased by 66%, and new jobs in life sciences increased by 25%.
The report also mentions that the future development of the UK will focus on upgrading infrastructure, transitioning to net-zero emissions and a green economy, and strengthening its status as a superpower. In this regard, according to the news released by the British government network (GOV.UK) in November 2020, British Prime Minister Johnson released a "ten-point plan for the green industrial revolution". The plan covers areas such as clean energy, transport, nature and innovative technologies, and aims to push the UK to eliminate its causes of climate change by 2050. The scheme, which will draw on more than £12 billion in government funding, will support and create up to 250,000 high-skilled green jobs across the country and aims to more than triple private sector investment by 2030.
Focus on Chinese businesses and capital in the UK
For Chinese businesses and capital, the UK is a market in Europe. Regarding the layout of Chinese-funded enterprises in the UK, Fang Wenjian, general manager of the London branch of bank of China and president of the British Chamber of Commerce in China (CCCUK), said that in 2020, the total number of Chinese-funded enterprises increased from 13,000 in 2019 to 15,000. Among them are Chinese giants such as Huawei, Alibaba, Lenovo, Tencent, Geely and Wanda Group, who have expanded the UK market by acquiring, investing in UK companies, or directly landing (building data centers, service centers or European headquarters, etc.).
When it comes to the investment of Chinese enterprises and capital in the UK, it is reported that the investment field of Chinese enterprises in the UK has expanded from the original trade, finance (financial technology) and information technology to intelligent manufacturing, life science and technology, health, automatic driving and other fields. In addition, according to Grant Thornton, in the first half of 2021, the number of Chinese investments in the UK reached pre-pandemic levels, with transactions up 44% year-on-year. Among them, China Resources Group bought British company Viridor for 4.2 billion pounds – the biggest deal this year; in addition to China Resources, Tencent Holdings invested in three UK companies in the first half of 2021, covering a number of sectors: surgical robotics, drug development and self-driving car software.
After Brexit, it remains to be seen whether London's status as "Europe's first science and technology innovation center" will be replaced by the rapidly rising Paris.
In fact, over the past few years, 36Kr Global, Asia's leading new business media and enterprise service platform, has helped the innovation capabilities of each region in Asia cross borders and be applied and tested in more markets by mobilizing ecological resources and service experience across Asia. In 2021, in order to be able to provide the value of connectivity on a larger geographical scale, 36Kr Global established the European station KrEurope and the Australia New Zealand station Kr-ANZ, aiming to work with local partners to help more Asian companies expand into the European, Australian and New Zealand markets, while helping overseas companies enter Asia and promote business cooperation in Asia and overseas on a larger geographical scale. If your company is interested in cooperating, please contact [email protected] for detailed consultation.
Wen | Deng Yunxi
Editor| Zhao Xiaochun
LET'S CHUHAI CLUB went to the Southeast Asia Salon - Beijing Station
On December 16th, the fourth stop of the "LET'S CHUHAI CLUB - Overseas Southeast Asia Series Salon" co-sponsored by the Singapore Economic Development Board and 36Kr will come to Beijing. This event will focus on hot topics such as the strategy of enterprise service companies in southeast Asia and how multinational enterprises can break through cultural barriers, and jointly discuss the business opportunities and challenges of enterprises going to southeast China to create the next generation of global enterprises.
Please click on the image below to register for the event.