TNAG-1745-FCO40-2464-Visits-by-FCO-officials-to-Hong-Kong--including-visit-by-Lor-1988 — Page 19

Mr McCleary

FED

CONFIDENTIAL

VISIT TO CHINA AND HONG KONG BY MR PATTEN

1.

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Манук Mr Wool 1310

√3579.

I have now read Mr Patten's report of 28 September about his visit to China and Hong Kong.

I found it very enjoyable and interesting to read, but more to the point, it contained some comments which struck a chord with me and which reminded me of several concerns which I have had since joining FED. These are as follows:

i) Mr Patten has pointed out the degree of dependency on Aid Trade Provision of some UK firms and he has said "what really determines whether or not a company gets a contracts is whether it is competitive itself, not whether Government support is competitive". I am very concerned that British business find it all too easy to blame us, HMG, in one guise or another for their failure to win contracts. Over the past few years it has always been our fault; it is either

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fault because we do not offer concessionary financing; or it is our fault because we are not represented in Shanghai; or it is our fault because we do not have a large enough Commercial section in Peking; or it is our fault because we issue visas too slowly I cannot believe that this is true. We now have a greatly expanded commercial section in Peking, headed by an experienced DTI official, who has previously done commercial work overseas on secondment to the FCO. We have improved our visa operation. We have opened a Consulate General in Shanghai. Mr Patten notes that he has signed a second concessional financing arrangement for £300,000,000 with the Chinese. I have noted elsewhere how disappointing it is that the conference/seminar circuit has not moved on over the last 5 or 6 years.

Doing business with China just does not seem to be attracting new and committed people who are prepared to make the necessary effort. Why are we pouring money and people into this if, as Mr Patten says, "British businessmen are not exactly demonstrating East India Company entrepreneurialism at the moment". What is the SBTC doing, apart from having tiffs with the 48 Group, to stimulate trade and new opportunities. They wanted to look after the Governor of Sichuan while he is in London, but came back to say that they did not have any money and UK firms would not pay. So the COI has stepped in again. The commercial scene, with some honourable exceptions, is peopled with too many old faithfuls, who enjoy China, but who don't seem to make much money. The scene is stodgy and dull, and our trade figures show a deeply disappointing return our substantial efforts.

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0 4 OCT 1988