Made in China Tag Not Important Says London Prof
Wednesday, 14 September 2011
Old Boy and highly respected London Business School Professor of Accounting, Chris Higson returned to Bolton School to deliver a well attended presentation to the local business community about how to exit the recession and reindustrialise the British economy through the nurturing of SMEs.
The lunch time address focused on the positives and reminded the audience that, despite the recession, the UK is still the sixth largest manufacturer in the world and top in terms of the proportion of its exports that are high tech. Even though the UK only has 1% of the world's population, it does have some of the best universities in the world - in a recent QS poll four out of the top 10 global universities were in the UK.
In his talk, Professor Higson identified key factors that SMEs need; a climate where corporate tax rates are competitive, where there is as little red tape as possible and where there is a knowledge society. SMEs critically need the labour force to have knowledge and skills and they need to able to access funding. SMEs are always financially vulnerable, but particularly so in a recession. In order to prosper they need the economy to be growing and for there to be confidence in the marketplace.
Professor Higson highlighted the great entrepreneurial spirit that has always existed in the UK and reminded the audience that profits these days are often more focussed around intellectual capital and services than the actual production of goods. Citing Apple's iPod, he demonstrated how, although supply chains are now global, the bulk of profit can still be made where the intellectual ownership and brand resides. Although the iPod carries the words "Made in China" only $4 out of $300 goes to the Chinese. Japan takes approximately a quarter of the revenue for its manufacture of components but it is with Apple in the US where the vast bulk of the profit is made. The Fen Valley near Cambridge is the UK's equivalent of Silicon Valley and much of the entrepreneurial spirit here emanates from the university city. Professor Higson commended the University of Bolton for how it links well with local business and industry and for its pioneering work in the field of Advanced Textiles and Material Science.
The floor was opened up to questions and answers and concerns were raised in the local community about the lack of basic literacy and numeracy skills of school leavers. Professor Higson felt that it is highly possible that soon more academic students will enter the marketplace aged 18 as new costly tuition fees will see them undertake a cost benefit analysis of studying for a degree. The question of foreign ownership in the UK was also raised. Professor Higson reminded the audience that, historically, the UK had been the world's most acquisitive nation. However, since 2004 inward acquisition capital has significantly exceeded outward acquisition. The jury is still out as to the effects of this but there is a body of evidence showing that the UK is benefiting from foreign ownership. Nissan's production plant in the North-East is the most productive plant in the world and Jaguar Landrover, bought out by the Indian firm Tata, has seen a successful turnaround.
Earlier in the morning, Professor Higson had worked with Sixth Form girls and Sixth Form boys as they tried to understand the causes of the recession and how the UK might exit the current situation.