TNAG-0624-FCO40-772-Visit-of-Sir-Peter-Carey-(Permanent-Secretary--Department-of-1977 — Page 3

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SECRETARY'S MEETING WITH SIR ARTHUR KNIGHT OF COURTAULDS: 12.15 PM WEDNESDAY 23 FEBRUARY 1977

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Sir Peter had invited Sir Arthur Knight to call on him to discuss his recent visit to the Far East. It was particularly appropriate that Sir Arthur should hear of Sir Peter's experiences on his visit in that a top Courtaulds' man Norman Smith

was due to leave for Australia and elsewhere in the Far East the next day.

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visited

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Sir Peter said that in all four countries which he had

there Thailand, Hong Kong, South Korea and Japan were opportunities which British industry was not taking: obviously these opportunities varied from country to country. He said ther he thought there were opportunities for increased direct export to the Far East, especially Japan, where he had detected a changing attitude towards the purchase of imported goods and an opening up of the domestic market to imports. In Korea he thought there were opportunities for UK industry setting up production on a joint venture basis: Korea was relatively stable politically and was poised for great industrial growth there was the advantage of a low-wage, hardy and disciplined workforce.

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Sir Peter said that labour costs in Hong Kong had increased; but productivity was still high. There was manifest goodwill towards the UK: there needed to be a strengthening of the commercia. links to back up the political links. Hong Kong was a small market in itself but was an excellent jumping off point for exporting to the whole of SE Asia. It was politically stable and the threat of the expiry of the lease could to some extent be discounted: the Chinese found it convenient to have Hong Kong on their doorstep. Hong Kong was therefore a good location for Courtaulds to establish an office or even production facilities. Sir Arthur said that Courtaulds had a man in Hong Kong on the fibre side and two weeks ago had put a man in to deal with fabric exports. They had also opened this year an office in Tokyo. Their goods were all exported from the UK, although the man in Tokyo also dealt with pulp sales from Swaziland. The Japanese were Courtaulds' great competitors in China and their man in Tokyo also had a watching brief to keep an eye on the opposition. Courtaulds' exports to the Far East had jumped last year ahead of their exports to the rest of the world. The Japanese were even complaining about Courtaulds' competitiveness; for instance Courtaulds had cut the ground from under the feet of the Japanese on textile exports to India.

Hong Kong

4 Sir Peter said that if Courtaulds had a strong presence in Hong Kong they would be well placed for future trade with China. He asked whether Sir Arthur had contemplated setting up production in Hong Kong which made up fibre and fabric exports from the UK and then sold them in that part of the world. Sir Arthur & id that there were two problems which had stopped him hitherte from setting up production abroad: one was the limited manageri 1

such management could be be ter

staff available to Courtaulds

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