Business and Energy Secretary Greg Clark’s speech at the Asian Business Leaders Award dinner

Speech delivered by The Rt Hon Greg Clark MP, UK Secretary of State for Business, Energy and Industrial Strategy, at the Asia House Asian Business Leaders Award dinner on 1 November, 2016 at Banqueting House in London.

Half a world away

There’s a map that every business minister should be familiar with.
It’s a map of the world – on which a circle is drawn encompassing most of East Asia, South Asia and Southeast Asia.
That’s a big chunk of the world’s land mass – roughly one sixth of the total.
But here’s the point of the map:
More people live inside the circle than outside of it.
One sixth of the Earth contains more than half of its population.
To disregard Asia is to ignore most of the world.

For understandable reasons, British politics has been focused on Europe this year.
Next week, our eyes will be glued on America.
But as important as these places and their people are, let’s not forget that the larger part of humanity is Asian.
That is why the work of Asia House is of such value.
Your mission to promote engagement between Europe and Asia is always relevant – and becomes more so with every passing year.

Since becoming Business Secretary in July, I’ve made three overseas ministerial visits – all of them to Asia.
I’ve been asked if this is part of some special initiative.
And I say: no, there should be nothing special about a business minister from the West heading east.
In fact, it should be seen as an entirely normal part of doing business with the world.
After all Asia is where most of the world lives and works.

Smart Brexit

That said, proximity matters.
In a world of instant electronic communication, real objects – indeed real people – are still subject to the limitations of time and distance.
Which is why as a Government we attach the utmost importance to Britain’s relationship with our closest neighbours.
In June, the country voted to leave the European Union – and the democratic will of the British people must be respected.
Nevertheless we are determined to maintain the closest possible trading agreements with the rest of Europe.
Furthermore, throughout the process of negotiating those agreements, we will represent the interests of British business – and of the global businesses that invest in Britain.

So, does this argue in favour of hard or soft Brexit?
The answer is neither.
The only way forward is a smart Brexit.
This begins with a recognition that the divisions on this issue aren’t as deep as sometimes portrayed.
As you may know, I campaigned on the remain side of the referendum.
In all of that time, I met very few people who were 100 per cent for remain or 100 per cent for leave.
For most people it was a question of balance.
Of acknowledging both the advantages and disadvantages of our membership of the European Union and deciding which outweighed the other.
In the end, the national balance tipped in favour of leave, and now that the decision is made, what we need is not another polarised debate, but a united effort to maximise the advantages and minimise the disadvantages of our new position.
This is achievable.
Negotiating a new relationship with the EU is a complex process, but the underlying principle of every successful trade agreement is simple.
And that is mutual advantage.
The whole point of trade is not to produce winners and losers, but benefits on both sides.
That is the smart way – anything else the opposite.
For instance, talk of punishment falls into the trap of seeing trade as a weapon.
It also sets a terrible example in world where smaller nations need to coexist with their larger neighbours and vice versa.

Clearly, there are benefits to be had from integration within the larger economic areas, but there are benefits in differentiation too.
Economies that have the freedom and agility to specialise and innovate have an important role to play within the wider global economy – especially when the fruits of that experimentation can be shared through free trade.
And also through the understanding that can be gained when different places try different solutions to common challenges.
Given the sheer range of potentially transformative technologies now on the horizon, the ability to learn from the successes and failures of comparable economies is more important than ever.
Therefore diversity between or within nations should be seen as an opportunity not a threat.

It is in the nature of balances that they can be upset either way.
If excessive integration is to be avoided, then the same applies to the equal-and-opposite error.
Specifically, we should not regard Brexit as an opportunity to undercut our neighbours by lowering our standards.
For instance, by weakening workers’ rights or environmental protections.
Of course, all nations need to bear down on the unnecessary burdens of doing business – pointless regulation, punitive taxation and protectionist trade barriers.
Yet there is a point at which the call for lower costs becomes a call for lower standards.
That is a path we must resist; not solely for the sake of a harmonious relationship with Europe, but also because in attempting to beggar our neighbours we would beggar ourselves.
Britain cannot win a race to the bottom.
Not even if we wanted too.
Instead the way ahead leads up.

To see pictures of the event click below:-

Upgrade Britain

The British Government is committed to an industrial strategy.
It will be founded on the acknowledgment that to succeed we need constantly to upgrade the sources of our competitiveness.
For an advanced economy, the ultimate guarantee of competitiveness is not to pile it high and sell it cheap, but to do what no one else can do better – or do at all.
For instance, the reason why Britain excels in financial services is not because London is the cheapest city in the world, but because nowhere else has a greater concentration of relevant knowhow.
Such concentrations are underpinned by the essential foundations of an advanced economy:
A world class science and research base.
Leading edge industrial sectors.
A skilled and productive workforce.
Strong, self-confident communities.
Resilient, adaptable infrastructure.
As a country we have made great progress on all these fronts – but it is still uneven.
For instance we have some of the most productive companies in the world, but, compared to Germany, a disproportionate number of low productivity businesses.
We can boast the richest area in northern Europe – central London – but also nine of the ten poorest.
These aren’t remote provinces, without hope of further development, but great cities – places that could and should be more productive than they are.

Does this matter?

If the best of British business is world class, then why care about the rest?
As long as we win gold in our chosen areas of excellence, isn’t that enough?
Well, no – it’s not nearly enough.
Unlike athletics, an economy needs the elite to lead the field not leave it behind.
If the long tail of productivity becomes too long, it breaks apart.
The leading companies lose access to local supply chains – and to potential pools of talent.
Not every company can be a frontier company, but that doesn’t mean they can’t all contribute to the success of the sectors they belong to.
The same applies to different parts of the country.
Some places will be bigger, faster and flashier than others, but if we fail to upgrade skills, knowledge and infrastructure in every community, then the most vulnerable will lose their ability to connect and contribute to local and national economies.
That is why the process of upgrading our economy needs to be continuous – so that we keep up with other nations; but also consistent – so that we remain one nation.

Three lessons

This is the challenge:
To allow the best to excel, while enabling the rest to connect.
A strategic objective for companies as well as for countries.
Clearly, there is a lot to be learned from the strategies of successful businesses – especially those which operate across a range of sectors and markets.
Tonight we honour Hiroaki Nakanishi – and his remarkable leadership of just such a company.
When Mr Nakanishi became president of Hitachi in 2010, the company had suffered several years of major losses.
But in the course of his leadership, Hitachi was returned to profit.
Asia House rightly describes it as one of the greatest turnarounds in corporate history.
There are many lessons we could learn from this story of success, but allow me to focus on three.
Firstly, Mr Nakanishi’s boldness of vision.
The decisions he took were commensurate with the scale of the challenge.
The same must apply to Britain’s industrial strategy.
At a time of change, Government must set a clear direction of travel.
As we’ve shown on major infrastructure decisions like Heathrow and Hinkley, that is exactly what we are doing.
We can’t promise decisions that please everyone, but everyone will know where they stand.
For those making long-term investments in this country, nothing else will do.
The second lesson concerns the importance of experience.
Mr Nakanishi took the helm in 2010, but he joined the company in 1970.
The decisions he took weren’t just bold, they were based on four decades of personal experience – not to mention personal loyalty.
It is hard for any outsider – no matter how accomplished – to replicate that kind of perspective.
In Westminster and Whitehall we have many experts, but the true insiders are in companies and communities across the land with local knowledge of what local economies need to grow and prosper.
Our strategy must therefore be written with, not just for, the innovators, investors and job creators.

But if this is a local industrial strategy, it is also global.
And that brings me to the third lesson.
The transformation of Hitachi, though informed by insider experience, was not an inward-looking exercise.
A business is nothing without customers and Hitachi has turned to the world to find them.
It has gone to where the growth is.
The British economy must have a global growth strategy too – and it follows from my earlier argument that this must include an Asian growth strategy.

Open to the world
We build on deep foundations – decades of industrial cooperation between Britain and Asia.
And here I would like to reiterate my country’s gratitude to Nakanishi-san for his own invaluable contribution to building up those links.
In particular, Hitachi has made – and is making – important investments in the UK economy; including a 30 acre train manufacturing facility at Newton Aycliffe in County Durham and the proposed new nuclear power station at Wylfa on Anglesey.

It is thanks to projects like these that Japan is now the second biggest source of foreign investment in the UK.
However, it is the quality and not just the quantity of that investment that stands out.
A prime example – but by no means the only one – is car manufacturing.
The British automotive sector is now the most productive in Europe, but it wasn’t always that way.
Back in the 1970s, the sector was emblematic of our then status as the ‘sick man of Europe’.
But rather than giving in to a narrative of decline, Margaret Thatcher embarked upon a course of revival and reform.
The false solutions of nationalisation and protectionism were rejected in favour of an opening to the world.
In car manufacturing, this change of direction led to an ever-closer relationship with great Japanese companies like Nissan, Honda and Toyota.
Those who thought the British workforce would never adapt to the Japanese culture of workplace management, or that Japan’s mastery of industrial efficiency could never translate to another country, were proved wrong.
Far from a clash of civilisations, we have achieved a meeting of minds.
And of course the story continues – the latest chapter being Nissan’s decision to produce the Qashqai and the new X-Trail at its outstanding Sunderland plant.

My first overseas visit as Business Secretary was to Japan.
And the first big decision I took in the role concerned a leading Japanese company, SoftBank.
The issue was SoftBank’s bid to buy ARM Holdings – a British chip manufacturer.
There were those who urged me to block the bid, arguing that we shouldn’t allow foreign ownership of one of our biggest technology companies.
But this was a good deal for Britain: the biggest ever single investment in the UK from any Asian country; a huge vote of confidence in the British economy; and a major boost to Cambridge as a global centre of science and innovation.
Despite the historic significance of the British vote to leave the European Union, I was proud to show that Britain is open for business with trading partners from around the world.
The same goes for Chinese investment in Hinkley Point C, Indian investment in our steel and car industry and all our trading relationships with the nations of Asia.
At a time when powerful forces seek to sow mistrust between nations and cultures, it is vital that we demonstrate what openness and trust can achieve.
The world must not be divided between rival trading blocks.
So let us continue to draw East and West together.
Thank you.

This is the draft of Mr Clark’s  keynote speech which he delivered at the Asia House Asian Business Leaders Award dinner at Banqueting House on 1 November, 2016 before presenting Hitachi Chairman Hiroaki Nakanishi with the Award. It may have varied slightly when delivered.

To read the story, ‘The only way forward is a smart Brexit’ – UK Business Secretary, based on this speech click here.

To read the story Hitachi Chairman honoured with Asia House Asian Business Leaders Award covering the gala event at Banqueting House click here. 

To read the story It is time for the famed British diplomacy and not the wrecking ball: Hitachi Chairman, based on Hiroaki Nakanishi’s acceptance speech at the Asian Business Leaders Award dinner click here.