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International trade expert queries value of Scotland's China plan

Scotland's exports and inward investment agency has stressed the "long-term" nature of the country's China strategy after an international trade expert called the benefits to date "a drop in the ocean, economically speaking".

A spokesman for Scottish Development International (SDI) pointed to new figures from HM Revenue & Customs which showed that Scottish exports to mainland China in the year to October 2012 amounted to £470 million, up 15% on the previous year and a 48% rise between 2006 and 2011, the most recent period for which full-year figures are available.

He also revealed that one of Scottish Enterprise's most senior officials, Julian Taylor, director of strategy and economics, will begin a two-year secondment to China later this year, underlining the commitment to increasing trade with fast-growing east Asian markets.

The agency was responding to questions from Denis Taylor, a former senior director with SDI, now managing director of trade facilitator The Hidden Office, and a member, alongside SDI and the Scottish Council for Development & Industry (SCDI), of the Secretary of State for Scotland's Scotland International trade advisory group.

Posting on the business network LinkedIn to promote a "constructive debate", Taylor asked whether Scotland "could get a better return on investment from focusing on markets closer to home that although may be growing more slowly, have a greater probability of success?".

He added: "The Scottish Government has claimed that its China Plan is paying off. They claim credit for all growth in sales to China and report that their plan has resulted in an extra £220m in exports for the economy. However, these exports are over three years, an average [increase] of only £73m a year. It is export sales, so netting off energy, materials, import costs etc, the actual value add to the economy (jobs) will be lucky to reach 50% of that.

"Scotland's annual GDP is currently around £145 billion. So the China Plan at best added 0.05% to our economy. Economically speaking, a drop in the ocean. Is this really something that can be said as 'paying off'? What would Scottish businesses have been able to achieve on their own without the plan? And can something that contributes around 0.05% to GDP really be described as 'strategic' even if it achieved 10 times as much as that?"

Frank Boyland, head of Asia region at SDI, said: "To achieve long-term sustainable growth we must increase our global reach by looking to the more challenging, faster-growing markets like China, and we have a pivotal role to play by helping to open doors and accelerate export success through customised support such as in-market expertise, trade missions and the GlobalScot network.

"Clearly this is not a short-term strategy. However, it is vital we are proactive in responding to opportunities in China, and more widely across Asia, with increased presence and in-market expertise to support the longer-term success of Scotland's international trade efforts."

Scotland currently spends £430,000 annually staffing and maintaining offices in Beijing, Shanghai, Hong Kong and, since last month, Shenzhen. As well as maintaining 12 in-country employees, a "significant part" of SDI's £728,000 east Asian marketing and promotions budget is spent in China.

Since 2007 there have been nine visits by Scottish Government ministers and cabinet secretaries, costing about £44,000 (exclusive of the travel and subsistence costs for around 30 accompanying officials) for a total of 60 days.

In addition to PetroChina's joint venture with Grangemouth's Ineos, so far there are currently only four mainland China inward investors in Scotland: Lenovo, Bank of China, Ningxia Zhongyin Cashmere Company and SHBV Hong Kong.

However, SDI, which is in talks with various potential investors, expects this number to increase "as Chinese companies require a larger footprint in Europe as they become truly global companies".

A Scottish Government spokeswoman said: "Collaboration between China and Scotland continues to go from strength to strength, and the economic benefits of this relationship are clear.

"However, our relationship with China is based on priority areas that also embrace educational and cultural links and increased collaboration in the research and development field."

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